U.S. companies borrowed 16% more in May to finance their investments in equipment compared to a year earlier, the Equipment Leasing and Finance Association (ELFA) said on Thursday, as firms ramp up production to meet demand.

The companies signed up for $9.4 billion in new loans, leases and lines of credit, compared with $8.1 billion a year earlier.

"The economy continues to provide jobs and corporate America, in general, reports strong balance sheets - all in the face of a waning health pandemic," Ralph Petta, ELFA's chief executive officer, said in a statement.

"Offsetting this good news is high inflation, creating havoc for many consumers, and continued supply chain disruptions and higher interest rates," Petta added.

ELFA, which reports economic activity for the nearly $1-trillion equipment finance sector, said credit approvals totaled 76.8%, down from 77.4% in April.

The sustained rising interest rate environment, a pandemic overhang and extreme supply chain bottlenecks have pushed for a greater need in the equipment financing industry, said Scott Dienes, senior vice president of Associated Bank, which offers machinery loans.

Washington-based ELFA's leasing and finance index measures the volume of commercial equipment financed in the United States.

The index is based on a survey of 25 members, including Bank of America Corp, and financing affiliates or units of Caterpillar Inc, Dell Technologies Inc, Siemens AG, Canon Inc and Volvo AB.

The Equipment Leasing and Finance Foundation, ELFA's non-profit affiliate, said its confidence index for June was 50.9, up from 49.6 in May. A reading above 50 indicates a positive business outlook.