The American Rental Association (ARA) said the U.S. rental market will outperform the economy in the next few years, forecasting 7.6% growth this year followed by 5.5% in 2019 and 5.9% in 2020. Growth is still forecast to be around 5% in 2020 and 2021.
The ARA’s five year forecast now sees equipment and event rental revenues in North America exceeding US$71.7 billion in 2022, comprising $65.4 billion in the US and $6.3 billion in Canada.
The latest quarterly forecast upgrades the projections made by ARA in its previous forecast released in May.
“We continue to see strong growth in rental revenues through 2018 and into 2019 due to the strong performance of the US economy,” said John McClelland, Ph.D., ARA vice president for government affairs and chief economist.
“Our forecast for 2019 does indicate slower growth than we have experienced in 2018 because the US economy is projected to grow at a slower rate than in 2018. However, in both cases, rental revenues are expected to grow at higher rates than the economy.”
In the US, equipment rental revenue is expected to finish 2018 at $53.04 billion, up 7.6% over 2017.
“Our biggest concerns going forward are the continuing negative effects of tariffs on the rental industry, both from the increasing costs of equipment for all rental segments and construction equipment, as well as the overall fiscal drag that is caused by tariffs,” said McClelland.
The construction/industrial segment remains the largest, with forecast growth rates of 5.6% in 2019, 5.3% in 2020, 4.4% in 2021 and 4% in 2022 to $44.85 billion. Growing even faster, however, will be the general tool sector, with rates of 6.2% in 2019 and even higher rates in the years to 2022.
Scott Hazelton, managing director, IHS Markit, the forecasting firm that compiles data and analysis for ARA Rentalytics, said the biggest surprise of the updated forecast has been the resiliency of the U.S. economy.
“After several years of temperate growth, it weathered an energy price hike and then an energy price collapse without significant ill effect. While one has to constantly be aware of the warning signs of a downturn, nothing appears imminent.”
U.S. investment in rental equipment also is expected to be steady over the forecast period, increasing 2.6 percent in 2019 to $14.3 billion, adding another 4.5 percent in 2020 and then slowing to growth rates of 1.7 percent in 2021 and 1.3 percent in 2022, reaching $15.4 billion.
In Canada, rental revenue is forecast to grow 4.3% in 2018 to $5.4 billion and then continue to expand with revenue increases of 4.8% in 2019 and 4.7% in 2020.