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ACG: Construction Firms More Likely to Lease Than Buy Equipment

January 31, 2012, 06:00 AM
Filed Under: Construction

The most recently released 2012 Construction and Hiring Business Outlook released by The Associated General Contractors of America’s (AGC) says the construction industry is mixed for 2012, as firms must balance growing demand for certain private sector market segments with continued weakness in key sectors, the near end of the stimulus and declining overall demand for public sector construction.

According to this report which analyzes the survey responses from more than 1,300 construction firms conducted by the Associated General Contractors of America and Computer Guidance, the industry is not likely to experience a recovery until at least 2013 despite some growing positive trends.

The Outlook indicates that many construction firms report leasing rather than purchasing equipment. While 49% of firms reported purchasing new equipment in 2011, significantly more (69%) reported leasing construction equipment. Even when firms added new equipment, however, their investments were relatively modest.
The report cites trends towards leasing, instead of buying, new equipment is likely to accelerate in 2012. While only 40% of firms report they plan to purchase new equipment this year, nearly two-thirds (66%) report they plan to lease new equipment. As with 2011, firms' appetite for new equipment is likely to be modest this year. Fifty-seven percent of firms will invest $250,000 or less on new equipment purchases in the new year while 70 percent of firms plan to lease $250,000 or less worth of construction equipment.

Per the report, while the outlook for the construction industry appears to be improving in 2012, significant challenges remain and while conditions will improve for many firms this year, the industry should not expect a broad-based recovery until 2013 at the earliest.

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