The latest five-year forecast from the American Rental Association (ARA), which is updated quarterly, shows lower expected growth than was previously forecast in May. Yet, no downturn is expected any time soon; North American equipment and event rental revenues are predicted to exceed US$71 billion in 2023.
$64.7 billion of that will be generated in the US and $6.4 billion in Canada. The latest forecast is the first to project revenues for 2023.
John McClelland, ARA Vice President for Government Affairs and Chief Economist, said, “The market for the equipment and event rental industry remains positive, but there definitely are signs that the US economic growth is slowing and this projected slowdown is reflected in our latest forecast.”
He added, “Trade tensions and a slowdown in the global economy are headwinds for the economy with the risk of a recession happening in the US within the next 12 months at about 35%.”
For 2019, equipment and event rental revenue in the US is now is expected to be $55.7 billion, representing a 5% increase compared to 2018. Growth in 2020 and 2021 is forecast to be 3.8%, which is down from the 4.2 and 4.3% growth previously forecast for 2020 and 2021, respectively. It is expected that 2022 will see growth of 4.1%, rather than the 4.7% previously predicted, and in 2023 there will be 3.3% growth.
Meanwhile, in Canada rental revenue is forecast to grow 2.1% in 2019, which is less than the 2.5% previously forecast, to total nearly $5.5 billion. Then in 2020, growth of 4.9% is expected, which is actually higher than the 4.4% predicted in May, and in 2021 5% growth is forecast, down from the 5.6% previously predicted. The 2022 forecast of 3.6% growth is slightly up from the 3.7% forecast in May, and in 2023 the market is expected to see growth of 2.2%.
Scott Hazelton, managing director, IHS Markit, the forecasting firm that compiles data and analysis for the ARA Rentalytics subscription service as part of a partnership with the ARA, says the US economy continues to decelerate this year as the stimulus from prior tax and budget incentives diminish.
“This has been exacerbated by still ongoing uncertainty over trade and tariff policy, particularly with China, and concern over the strength of the global economy. This uncertainty is likely to persist into 2020 and become further complicated by the presidential election cycle.
“The result is a modest reduction in our near-term economic outlook, particularly for the construction and manufacturing segments on which rental depends. We have slightly lowered our expectation for rental revenue growth, but we are not expecting a downturn.”