ARA drops 2017 equipment rental forecast slightly, but predicts future growth

Updated Aug 9, 2017

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The American Rental Association (ARA) says in its latest quarterly update on its five-year forecast that equipment rental revenue in 2017 will reach $49.3 billion, a slight decrease from the $49.4 billion the association estimated in its last report.

While this new forecast is a bit lower, it still represents a 4.3-percent increase over 2016. The estimates cover construction/industrial, general tool/light construction and party/special event.

ARA did boost its growth rates, however, for later years, estimating 5 percent growth in 2018 and 5.8 percent growth in 2019. For 2020 the association dropped its growth forecast a bit to 4.4 percent, and 3.9 percent in 2021. The combined final rental revenue for 2021 remains the same as previously estimate at $59.4 billion.

“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,” says John McClelland, ARA’s vice president for government affairs and the group’s chief economist. “How Congress deals with tax reform and infrastructure spending also could add to the equipment rental industry’s momentum,” McClelland said.

Scott Hazelton, managing director of IHS Markit which compiles the data for the forecasts, expects growth rates for construction/industrial and general tool equipment rental revenues to be roughly 4 percent. The previous forecast put the growth rate at ranging from 4.1 percent to 6.1 percent from 2017 through 2021.

“There is considerably greater uncertainty regarding the outlook for 2018,” Hazelton explains. “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 down side next year.”

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ARA’s five-year forecast estimates a 2.7 percent increase in rental revenue in Canada this year for $5.12 billion, with growth expected to reach 3.2 percent in 2018, 4.7 percent in 2019, 5.1 percent in 2020 and 5.6 percent in 2021, for a total of $6.14 billion at that point. This is marginally higher than the previous forecast, which expected $6.13 billion.