ARA forecasts equipment rental to reach record revenue in 2016

Updated Nov 11, 2016

Backhoe generic stockThe American Rental Association has forecast record revenue for the equipment rental industry this year, anticipating growth of 4.3 percent to $47.3 billion. By 2020, the association estimates revenue to reach $55.5 billion.

The estimates come from ARA’s latest five-year forecast, the ARA Rental Market Monitor, with data compilation provided by HIS Markit.

“While we are forecasting a gradual slowing in the growth of rental revenues in this quarterly update compared to our last quarter, we are still showing rental revenue growth in excess of the growth in the U.S. gross domestic product (GDP),” says John McClelland, ARA’s vice president for government affairs and chief economist.

“Our outlook for the equipment rental industry continues to be positive and our scenario analysis suggests that if a mild recession were to hit the U.S in 2017—of which there is a 20 percent chance—there would not be a significant impact on the equipment rental industry because the likely cause of such a recession would be a weakening in economic activity in Europe,” McClelland says.

Estimates for 2017 show a slightly slower growth trend, with revenue anticipated to grow another 3.4 percent to $49.0 billion.

IHS Markit says the results of yesterday’s U.S. elections could impact revenue, but doesn’t expect revenues to shift outside of the forecast ranges no matter the results. However, “political uncertainty” in the U.S and across the globe has “delayed recoveries” in commodity and oil markets that has delayed investment, according to HIS Market Managing Director Scott Hazelton.

“The result is a somewhat slower pace of economic activity, particularly in capital goods intensive markets, such as construction and energy exploration,” he says. “However, the U.S. economy remains fundamentally solid and some domestic uncertainty will dissipate after the election. The result is a modest reduction in expected rental revenue growth. However, the outlook continues to be one of growth and growth that will outpace the broader economy.”

The ARA Rental Market Monitor forecasts growth of 4.2 percent in equipment rental revenue in Canada for 2017, to $5.1 billion, after an expected 0.1 percent decline this year. By 2020, revenue is anticipated to climb to $5.8 billion.