(Reuters) -U.S. companies borrowed 2% less to finance equipment in August than a year earlier, the Equipment Leasing and Finance Association (ELFA) said on Tuesday.

However, equipment borrowings rose by 2.8% from July.

The Washington-based trade association, which monitors economic activity in the equipment sector valued at more than $1 trillion, also reported that the average credit approval rate rose to 78.7% in August, the highest rate since December 2021.

"The equipment finance sector is holding up well despite some choppiness, and we're seeing a second consecutive month of improving demand," said Leigh Lytle, ELFA President and CEO.

"With lower interest rates now a reality, we should see an easier financial environment, which should help fuel growth in equipment and software demand over the next 12 to 18 months."

The ELFA CapEx Finance Index of leasing and finance activity is based on a survey of 25 members, including Bank of America ( BAC ), the financing units of Caterpillar ( CAT ), Dell Technologies ( DELL ), Siemens AG, Canon, and Volvo AB.

The Equipment Leasing & Finance Foundation, ELFA's non-profit affiliate, sees its September confidence index relatively unchanged at 59.9 from 60.2 in August. A reading above 50 indicates a positive business outlook.