GORDON PLATT'S CREDIT OUTLOOK

GORDON PLATT'S CREDIT OUTLOOK

RENTAL DEMAND FOR HEAVY EQUIPMENT is booming, particularly along the U.S. Gulf Coast and in parts of the Rust Belt.

Orders for heavy equipment are a leading indicator for construction and general business activity, said Daniel I. Kaplan, president of Hertz Equipment Rental Corp., Park Ridge, N.J."The entire Gulf Coast, from Houston straight across to Mobile, Ala., is rebuilding and expanding its industrial base," Mr. Kaplan said.

Paper and steel mills, chemical manufacturing facilities and refineries are sprouting up and older plants are being revitalized.

Mr. Kaplan said Hertz is expanding its fleet of equipment by 25 percent to handle the increased demand in the Gulf area for large air compressors to support plant renovation, access equipment (such as booms and scissors, which have replaced scaffolding), cranes, concrete mixers, moving platforms and other heavy equipment.

Hertz supplies more than 180 types of equipment and is changing its fleet mix to reflect the increased demand for industrial, as opposed to residential, construction equipment.

"We're seeing a boom in heavy equipment rentals in the Rust Belt area as well - in Ohio, Michigan, Illinois and Indiana," Mr. Kaplan said. The Gulf Coast and the Rust Belt "are twolarge geographical areas where we see big trends in the United States," he added.

There has been a major slowdown in the Northeast, but rental demand is still growing at a 10 percent to 20 percent pace in the area. "That's weak for us," Mr. Kaplan said, pointing out that Hertz's revenues grew at a 30 percent rate in the first quarter following a 26 percent advance in 1989.

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BUSINESS EXPECTATIONS for second-quarter gains in sales are strongest in the Oil Patch states, while the area with the bleakest outlook is New England, according to a quarterly survey of 1,500 business executives released by Dun & Bradstreet Corp. Tuesday.

The New England states' Employment Optimism Index fell to zero, indicating that virtually no job growth is expected in the next few months. In the Pacific states, the area with the rosiest outlook six months ago, fewer businessmen now expect higher sales and prices.

"The drop in expectations for increased new orders in the Pacific and New England regions is largely a function of anticipated cutbacks in defense spending," said Joseph W. Duncan, corporate economist and chief statistician at Dun & Bradstreet.

Three of the top six states awarded defense contracts last year are in the Pacific and New England regions.

The D&B survey found expectations for higher prices were unchanged, suggesting that inflation is not accelerating.

Mixed signals on the economy, with signs of a rebound in the Rust Belt and weakness in defense-related industries, mean the Federal Reserve likely will stand pat on monetary policy for the time being.