ARA forecasts equipment rental revenue at $49.4 billion for 2017

Updated May 12, 2017

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The American Rental Association (ARA) expects U.S. equipment rental revenue in 2017 to grow 4.5 percent, reaching $49.4 billion, according to its latest five-year forecast. This is $500 million more than its previous forecast issued in January.

The forecasted figure combines revenue for construction and industrial, general tool and light construction, as well as party and special events. ARA expects growth rates of 4.7 percent in 2018, 5.1 percent in 2019, 4.6 percent in 2020 and 4.4 percent in 2021, to reach $59.4 billion.

“The equipment rental continues to post strong performance numbers with annual revenues closing in in the $50 billion mark this year,” says John McClelland, ARA’s vice president for government affairs and chief economist. “The issues going forward are how the Congress is going to deal with tax reform and infrastructure spending. If tax reform can lower rates and simplify the code for all businesses that could be a sign of even stronger growth and a strong infrastructure bill will add to that momentum.”

ARA is forecasting the compound annual growth rates (CAGR) for the construction and industrial equipment segment and the general tool rental segment to grow 4.1 percent and 6.1 percent between 2017 and 2021. This, the association says, is “despite sluggishness in nonresidential construction, contractions in real residential construction and uncertainty of additional infrastructure spending.”

These figures come from the second quarterly forecast for the year for the ARA Rental Market Monitor. Economic forecasting firm IHS Markit compiles the projection data for ARA and its managing director, Scott Hazelton, says weak first quarter U.S. gross domestic product figures “masked solid demand for investment, which will help fuel growth in equipment rental revenues.”

“Construction growth has remained robust. While it will moderate over the year, it will support significant rental potential,” says Hazelton. “Reduced headwinds from exchange rates and improving business confidence also are aiding the industrial sector and its equipment rental demands. Good decisions could improve the outlook while poor ones could substantially diminish it. However, the trends to date suggest strong equipment rental demand for 2017, 2018 and beyond.”

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ARA’s forecast calls for 2.7 percent revenue growth for this year, to $5.12 billion. The growth rates after that are 3.1 percent for 2018, 4.2 percent in 2019, 5.3 percent in 2020 and 5.9 percent in 2021 to $6.13 billion. The CAGRs for construction and industrial equipment and general tool rental revenues are forecast at 4.7 percent for 2017 and 4.3 percent through 2021.