5-Year Forecast for Equipment Rental Revenue Strengthens

5-Year Forecast for Equipment Rental Revenue Strengthens

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American Rental Association 5-Year Forecast for Equipment Rental Revenue Strengthens

A new five-year forecast for equipment rental industry revenues released by the American Rental Association (ARA) shows a moderate strengthening compared to the November forecast. ARA now projects U.S. equipment rental revenue will reach $48.9 billion in 2017, but then grow at an average annual rate of 4.3 percent over the forecast to top $56 billion in 2020.

“Growth is primarily driven by strength in both residential and nonresidential construction, as well as consumer spending,” said John McClelland, ARA vice president for government affairs and chief economist.

“The big question is how much additional spending is forthcoming under the new administration of President Trump. Our current view is that increasing infrastructure spending is more likely to affect the out years of our forecast,” McClelland said.

Construction and industrial equipment rental revenue is forecast to grow by 3.7 percent in 2017, 4.2 percent in 2018, 5 percent in 2019 and 4.2 percent in 2020. McClelland said revenues for the general tool segment are expected to grow even faster during the out years of the forecast due to the continued improvement in the U.S. housing market, with increases of 2.9 percent in 2017, 5.1 percent in 2018, 5.3 percent in 2019 and 6.6 percent in 2020.

Quarterly updates in 2016 previously showed positive expectations, but included a very gradual slowing in the expected growth of rental revenues over the year, according to figures compiled by IHS Markit™, the economic forecasting firm that compiles data for the ARA Rental Market Monitor™ subscription service as part of a partnership with ARA and Rental Management.

The first new quarterly forecast for the ARA Rental Market Monitor in 2017, however, reverses the trend with an expected gradual increase compared to last quarter’s forecast.

“The early initiatives from the Trump administration signal increased investment in infrastructure, a more accommodative energy policy, and a more business-friendly tax and regulatory climate. The results of these policies will not affect 2017, but will improve our outlook relative to baseline in 2018 and beyond. The nature of tax and regulatory reform is that they play out over a number of years, hence, improved growth compared to our prior forecast for 2018-2020,” said Scott Hazelton, managing director, IHS Markit™.

The latest ARA Rental Market Monitor forecast for Canada projects $5.148 billion in equipment rental revenue in 2017, which reflects a gradual slowing in growth rates to 3.3 percent compared to the November forecast.

The 2018 forecast of 3.8 percent growth and 2019 of 3.9 percent also reflect a gradual slowing compared to the November forecast. However, the current forecast for 2020 is for a more robust 5.3 percent growth in equipment rental revenue in Canada to reach $5.849 billion, which is greater than the November forecast.

About ARA: (www.ARArental.org) The American Rental Association, Moline, Ill., is an international trade association for owners of equipment rental businesses and the manufacturers and suppliers of construction/industrial, general tool and party/event rental equipment. ARA members, which include more than 10,000 rental businesses and more than 1,000 manufacturers and suppliers, are located in every U.S. state, every Canadian province and more than 30 countries worldwide. Founded in 1955, ARA is the source for information, advocacy, risk management, business development tools, education and training, networking and marketplace opportunities for the equipment rental industry throughout the world.

About IHS Markit™: (www.ihsmarkit.com)

IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 key business and government customers, including 85 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth. (IHS Markit is a registered trademark of IHS Markit Ltd. All other company and product names may be trademarks of their respective owners © 2017 IHS Markit Ltd. All rights reserved.)

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