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Equipment Rental Industry Forecast Indicates Signs of Improvement on the Horizon

Fri July 16, 2010 - National Edition
Construction Equipment Guide

The latest information from economic forecasting firm IHS Global Insight prepared for the American Rental Association (ARA) and Rental Management magazine reported that the equipment rental industry is starting to show signs of recovery from the national recession.

“The Outlook report indicates that the worst may be over for the equipment rental industry,” said Christine Wehrman, CEO, American Rental Association. “The U.S. economy is proving its resilience with growth returning to many sectors. However, construction spending continues to lag behind the rest of the economy. While construction spending is weak, spending on rental is beginning to grow and is leading the way in the construction space. We see the equipment rental industry gaining momentum in 2010 and 2011, with significant growth moving into 2012. These are positive signs for the entire economy as manufacturers, service providers and other vendors begin their budget planning for 2011 in the coming weeks and months.

“Although nonresidential construction, state and local spending remain down, other areas of the U.S. construction market have begun to rebound. With business equipment investments surging, almost $6 billion in stimulus money flowing into the economy in 2010 and consumer confidence driving increased demand, the equipment rental industry is poised to gain strength in Q3 and Q4, with improvement in all categories forecasted for 2011,” said Wehrman.

The equipment rental industry is made up of three general market segments: Construction & Industrial Equipment, General Tool and Party & Event. Influenced by the decline in both residential and nonresidential construction spending, the Construction & Industrial Equipment market has been hit hardest by the recession. Economic indicators show that employment in the construction industry has increased significantly with the onset of the 2010 construction season.

“This is a positive sign for the equipment rental market as cautious contractors will increase their equipment fleets through short-term and long-term rentals to keep employees productive,” said Wehrman.

According to IHS Global Insight, even though General Tool did not take as hard of hit as the Construction & Industrial Equipment market in the recession, it did decline as consumers postponed planned home improvement and do-it-yourself projects during the recession. Although new housing starts remain low, residential construction has noticeably increased in the past year and is forecasted to continue its recovery over the year as consumers are now willing to spend money on updating or repairing their homes.

“With consumer confidence growing homeowners and small business owners will rely on their rental stores to supply them with the tools they need to get these delayed projects started in 2010,” said Wehrman.

Party & Event equipment rentals have been the least influenced by the recent recession. Experiencing only a modest decline in 2009, this category is forecasted to grow in 2010. This is largely due to the consumer side of the business, which includes weddings, anniversaries, graduations and other celebrations. Fashion and trends influence this market, and consumers expect rental companies to have the latest options. Already, manufacturers and service providers in the Party & Event market have invested the time and resources needed to develop and market new products.

“With the influx of capital into this market in 2010, and positive customer demand, the Party & Event market is poised to be a leader in our industry regarding the market’s recovery into 2011 and beyond,” said Wehrman.

About IHS Global Insight

IHS Global Insight provides comprehensive economic and financial information available on countries, regions and industries, using a combination of expertise, models, data and software within a common analytical framework to support planning and decision-making. Through same-day analysis and risk assessment service, IHS Global Insight provides immediate analysis of market conditions and key events around the world, covering economic, political, and operational factors. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colo., IHS employs more than 4,200 people in more than 30 countries around the world.

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