Analysis of November 2025 US Business Equipment Borrowings Decline and Market Implications

On December 22, 2025, the Equipment Leasing and Finance Association (ELFA) reported a 4.4% year-over-year decline in U.S. business borrowings for equipment investments in November 2025 [1]. The ELFA CapEx Finance Index, tracking 25 major financiers and manufacturers including Caterpillar (CAT), Dell Technologies (DELL), and Bank of America (BAC), reflected this contraction. ELFA CEO Leigh Lytle attributed expected 2026 demand growth to the Federal Reserve’s 75 basis points rate cuts in 2025 [1].

On the announcement day, the Industrials sector declined 0.245% [0], aligning with the equipment financing contraction, while Utilities (+1.487%) and Technology (+1.019%) posted gains. Key stocks showed mixed reactions: CAT down 0.06% [0], DELL down 0.27% [0], and BAC up 0.01% [0]. Broader indices remained resilient, with the S&P 500 (+0.19%) and Dow Jones (+0.31%) rising, and the NASDAQ (-0.09%) edging down [0].

The November decline reversed a 5% year-over-year increase in October 2025 [2], suggesting a short-term fluctuation rather than a sustained trend. The ELFA’s confidence index stayed above 50 (58.3), indicating a positive industry outlook [1]. Caterpillar’s Q3 2025 earnings showed a record $39.8B backlog driven by 25% year-over-year growth in Energy & Transportation demand, highlighting underlying industrial strength [0].

1. Short-Term Fluctuation, Not Sustained Downturn
   : The reversal from October’s growth suggests the November decline may be temporary, possibly influenced by seasonal factors.
2. Limited Broader Market Impact
   : The Industrials sector decline did not drag broader indices, indicating the news was partially offset by other market drivers.
3. Contrasting Underlying Strength
   : Caterpillar’s record backlog contradicts the November borrowing decline, pointing to resilience in industrial equipment markets.
4. Rate Cuts as Potential Catalyst
   : The Federal Reserve’s 2025 rate cuts are expected to stimulate 2026 equipment demand, mitigating short-term weakness.

• Capex Slowdown Risk
  : A sustained decline in equipment borrowings could signal reduced corporate capital expenditures, negatively impacting industrial manufacturers and their supply chains.
• Tariff Headwinds
  : Caterpillar’s Q3 2025 earnings noted tariffs as a $1.6–$1.75 billion full-year cost headwind, affecting profitability [0].

• Fed Rate Cut Stimulus
  : The 75 basis points rate cuts are expected to lower borrowing costs, boosting equipment demand in 2026 [1].
• Caterpillar’s Backlog Support
  : The record $39.8B backlog provides a buffer for future revenue, indicating ongoing long-term demand [0].

• November 2025 equipment borrowings: -4.4% year-over-year [1]
• October 2025 equipment borrowings: +5% year-over-year [2]
• Industrials sector change (Dec 22, 2025): -0.245% [0]
• Caterpillar (CAT): -0.06% [0]; Dell Technologies (DELL): -0.27% [0]; Bank of America (BAC): +0.01% [0]
• Caterpillar Q3 2025 record backlog: $39.8 billion [0]
• ELFA November 2025 confidence index: 58.3 [1]
• 2025 Fed rate cuts: 75 basis points [1]