The American Rental Association’s latest quarterly update to its five-year forecast for equipment rental industry revenues continued its expectation for steady gains through 2021. The five-year projection, which varies only slightly from its April forecast, projects U.S. equipment rental revenue to reach $49.3 billion in 2017, a 4.3-percent year-over-year increase.
The late July forecast 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 to reach $59.4 billion combined for construction/industrial, general tool and party/special event.
The quarter update by IHS Markit forecasts real gross domestic product growth in the U.S. of 2.3 percent for 2017, 2.7 percent in 2018 and 2.3 percent for 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 the 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.”
“Job growth remains strong, GDP growth is solid, consumer confidence is high and housing continues to improve slowly, although construction spending has been flat,” added Scott Hazelton, managing director of IHS Markit. “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.
“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. 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 downside next year.”
On the other hand, in Canada, the latest five-year forecast continues to call for accelerating rental revenue growth each year, starting with a 2.7-percent increase in 2017 to reach $5.12 billion. IHS forecasts total rental revenue growth of 3.2 percent in 2018, 4.7 percent in 2019, 5.1 percent in 2020 and 5.6 percent in 2021 to reach $6.14 billion.
