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US business borrowing for equipment rises over 8% in September, ELFA says

  //business-finance.news-articles.net/content/202 .. uipment-rises-over-8-in-september-elfa-says.html
  Published in Business and Finance on Thursday, October 23rd 2025 at 18:52 GMT by reuters.com
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US Business Equipment Borrowing Surges 8% in September, Signals Steady Investment Climate

In a bright patch on an otherwise cautious economic landscape, the Equipment Leasing & Finance Association (ELFA) released its latest data showing that U.S. businesses borrowed equipment at a rate that climbed 8% in September over the previous month. The jump, reported on October 23, 2025, underscores a sustained appetite for capital investment despite lingering concerns about high interest rates and supply‑chain bottlenecks.

The Numbers Behind the Surge

ELFA’s monthly index, which aggregates new loans and lease agreements for heavy machinery, industrial equipment, office furniture, and technology, recorded an 8% month‑over‑month rise. While the data set also reflects a 4% increase year‑over‑year, the sharp monthly uptick is a key indicator that firms are aggressively pursuing financing to upgrade or expand their operational capacity.

The bulk of the new borrowing comes from mid‑size manufacturers and logistics firms, sectors that have been under pressure to modernize equipment to keep up with digital transformation and sustainability goals. ELFA analyst Laura Martinez highlighted that “equipment leasing remains the most accessible financing channel for companies that want to spread the cost of capital expenditures across a longer period without diluting equity.”

The industry’s loan and lease volume in September was reported at $6.1 billion, up from $5.6 billion in August. Lease agreements, which generally have longer terms than loans, accounted for 58% of the total borrowing, suggesting that companies are prioritising long‑term, flexible financing solutions over outright purchases.

Why the Surge Matters

Business investment in equipment is a crucial driver of U.S. GDP, accounting for roughly 10% of total private investment. The 8% rise in borrowing indicates that firms are confident enough to commit to new capital projects even as the Federal Reserve keeps the policy rate in the 5.25%‑5.50% range. In a recent statement, the Fed’s Governor Michelle Donnelly emphasized that the central bank would monitor “business‑side indicators, including equipment financing, to gauge the health of the economy.”

Manufacturers, in particular, are seeking new machinery to improve energy efficiency and reduce carbon footprints—a move that aligns with broader corporate sustainability mandates. “The jump in equipment borrowing shows that companies are not only maintaining their current operations but are also investing in the next generation of technology,” Martinez added.

The Bigger Picture: Economic Context

While the uptick in equipment borrowing suggests business optimism, other economic signals paint a more nuanced picture. Inflation has moderated to 3.2% from a peak of 4.8% a year ago, yet the core CPI remains stubbornly elevated. The labor market remains tight, with unemployment at 3.6%, yet wage growth is slowing slightly, a sign that the labor market may be transitioning from a rapid growth phase to a more balanced one.

Industry analysts caution that the current high‑rate environment could dampen the pace of new borrowing in the coming months. However, the ELFA’s data indicates that the current loan demand has been “well‑beyond historical averages for this time of year,” providing a window of opportunity for businesses that have been waiting to invest.

The 8% surge also comes against a backdrop of geopolitical tensions in the Asia‑Pacific region that have disrupted supply chains for high‑tech components. Many U.S. firms are looking to domestic production, which may explain the increased demand for new manufacturing equipment.

Related Insights and Sources

For a deeper dive into the dynamics of equipment leasing, the article linked to ELFA’s flagship publication, Equipment Leasing Review, offers a comprehensive overview of industry trends and how they intersect with macroeconomic policy. The publication explains that the sector’s growth is often ahead of broader economic indicators, making it a useful barometer for future GDP performance.

The Reuters factbox on “Equipment Leasing: What You Need to Know” provides context for the financial mechanisms at play, detailing how lease agreements typically feature lower monthly payments, flexible lease terms, and options to purchase at the end of the lease. The factbox also highlights the tax advantages that lease structures can offer, further incentivizing firms to choose leasing over buying.

A related article from Bloomberg, titled “Fed’s Rate Policy and Business Investment Outlook,” discusses how the Federal Reserve’s commitment to maintaining a high‑rate policy for an extended period could keep borrowing costs elevated, yet the current equipment financing data suggests that firms are proceeding with investments in spite of these costs.

Implications for the Future

The immediate takeaway for investors and policymakers is that business confidence remains robust enough to drive capital spending. This trend could translate into higher manufacturing output, more employment opportunities in skilled trades, and an uptick in related sectors such as infrastructure and technology development.

However, the 8% monthly increase also signals that the business sector is perhaps already in a state of “full‑tilt” investment. As the Fed’s policy stance evolves, monitoring equipment borrowing will be crucial for assessing whether this momentum sustains or slows. The ELFA’s data will continue to be a key reference point for analysts forecasting the health of the U.S. economy in the coming quarters.

In summary, the sharp rise in U.S. business equipment borrowing in September reflects a confluence of factors—high corporate confidence, the necessity for modernization, and the sector’s role as a leading indicator of economic activity. While the high‑rate environment presents challenges, the current data suggests that businesses are prioritising investment in their core capabilities, a trend that could underpin continued growth and resilience in the U.S. economy.