Amongst all the doom and gloom, in April (historically a
relatively weak month) the Finance and Leasing Association (FLA)
posted the highest new business total since March 2006. At £813m,
big ticket was an excellent month and only £6m off the March year
end peak. Business finance (excluding big ticket) was the highest
for two years, with both cars and other assets performing well.
No doubt this is in part due to an early Easter (this year March
21-24) and related school holidays that in effect reduced the March
trading period and potentially pushed sales into April.
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However, to confirm continued market growth, a statistic of note
is that in the 12 months to April, overall business finance volumes
exceeded £30bn, 12 per cent ahead of the preceding 12
months.
Not surprisingly given the headline big ticket figures, the
asset class “Aircraft, ships and rolling stock” is up 226 per cent
to £600m YTD. With “International Assets” up 56 per cent to over
£1.6bn YTD and big ticket volumes £2.4bn, it would appear that a
large proportion of big ticket business is being written
overseas.
Analysis by funding facility can be potentially misleading as
data includes big ticket transactions that can materially change
emphasis of the statistics. However, it is worth noting low
penetration of HP/lease purchase in April, at 30 per cent of total
volumes, YTD running at slightly under 33 per cent. “Other finance”
continues to grow, now standing at 25 per cent of YTD volumes.
Elsewhere in the economy, HMRC stubbornly maintains 2008 GPD and
fixed investment forecasts in the 1.75-2.25 per cent range,
slightly above most recent external forecasts. It will be
interesting to see if these move over the coming months, with
inflation applying upward pressure on interest rates and a number
of trade associations in industries such as print and construction
reporting weakening sector conditions. Good news for finance
providers are HMRC 2009 forecasts for the two statistics, up to
2.25-2.75 per cent and 2.75-3.25 per cent respectively.
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By GlobalDataComment
Media, banks and “real economy” investment behaviours (as
evidenced by FLA statistics) continue to remain at odds. Halfway
through the year, based on current evidence and HMRC growth
forecasts for 2009, business levels look solid but continued
vigilance will be essential. As suggested last month, those
companies able to maintain a growth outlook and take advantage of
current liquidity weaknesses should do well.
