Equipment Rental Industry Forecast Remains Steady
According to the latest quarterly update of the ARA Rental Market Monitor™, a five-year forecast for equipment rental industry revenues released by the American Rental Association (ARA), U.S. equipment rental revenue is expected to reach $49.3 billion in 2017, an increase of 4.3 percent from 2016.
The forecast also calls for U.S. rental revenue to grow 5 percent in 2018, 5.8 percent in 2019, 4.4 percent in 2020 and 3.9 percent in 2021, reaching a total of $59.4 billion. One reason: America’s real gross domestic product (GDP) is expected to rise 2.3 percent in 2017, 2.7 percent in 2018 and 2.3 percent in 2019.
“What is interesting to note is that the U.S. equipment rental industry continues to post strong performance numbers that nearly double the growth of economy and we expect this trend to continue for the foreseeable future,” said John McClelland, ARA’s vice president for government affairs and chief economist. “How Congress deals with tax reform and infrastructure spending also could add to the equipment rental industry’s momentum.”
Scott Hazelton, managing director, IHS Markit, said the data on the broad economy continues to be positive, resulting in very little change in the equipment rental revenue outlook.
“Job growth remains strong, GDP growth is solid, consumer confidence is high and housing continues to improve slowly, although construction spending has been flat,” Hazelton said. “With recent evidence proceeding roughly as expected, we continue to call for growth rates near 4 percent for construction/industrial and general tool equipment rental revenues. Party and event is expected to do somewhat better, with nearly 7 percent growth.”
Though 2017 is promising, Hazelton also cautioned that 2018 may not be as rosy for America’s equipment rental industry as previously thought.
“However, there is considerably greater uncertainty regarding the outlook for 2018. We still expect tax reform and an infrastructure spending increase that will accelerate the economy next year,” Hazelton said. “Such stimulus would push rental revenue growth toward 5 percent. Yet the lack of legislative consensus, even within the majority party in Washington, D.C., does give reason for concern that expected stimulus might not be forthcoming. We will be paying close attention to federal policy over the next few months, as forecast risk has moved significantly toward the down side next year.”
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