The American Rental Association forecasts steady but slightly slower annual growth through 2022 in equipment and event rental revenues in the United States—but the industry will still grow faster than the overall economy.
The ARA estimates growth of 5.3 percent this year over 2018. After that, U.S. rental growth projections are 4.8 percent for 2020, 5 percent for 2021 and 4.8 percent for 2022. These estimates have declined from ARA’s October quarterly forecast of 5.5 percent for 2019, 5.9 percent for 2020, 5.1 percent for 2021 and 4.7 percent for 2022.
The slower growth is attributed to the ongoing trade war with China and fading stimulus benefits from the tax cuts signed by President Trump in 2017 for businesses and individuals.
However, the lower growth projects are “not due to worries about a dramatic decline in the economy,” says Scott Hazelton, managing director of HIS Markit, which compiled the data and analysis for the ARA report.
Hazleton points to a projected reduction in U.S. real gross domestic product growth in 2019 of 2.5 percent compared to 2.9 percent in 2018, “resulting in the mild softening of the near-term growth outlook.” (Real GDP is a measure of all the goods and services produced in the economy in one year, adjusted for inflation.)
Overall, he says, the outlook is positive, even as the global economy continues to slow, because of continued U.S. economic growth. He says U.S. employment is strong and purchasing manager indexes are still in “expansion territory.”
“This remains a strong forecast for a growing industry that continues to expand faster than the overall economy,” says John McClelland, ARA chief economist.
The report notes an 0.5 percent increase in rental construction equipment in use in the United States from 2017 to 2018. McClelland says rental operators have improved fleet maintenance and “have remained disciplined around adding inventory.”
“The effect of better fleet management,” he adds, “is that minor fluctuations in the business cycle will not be overly disruptive to the rental industry.”
In all, U.S. rental revenues are expected to top $55.8 billion in 2019, growing to $64.4 billion in 2022. (In October, the quarterly ARA report forecast 2022 revenues would be $65.4 billion.)
For all of North America, ARA forecasts $70.9 billion in revenue growth for 2022. That’s down from October’s forecast of $71.7 billion.