ARA makes small cut to rental growth forecasts

By Murray Pollok14 August 2012

The American Rental Association (ARA) has slightly lowered its rental growth forecast for this year following a slowdown of economic growth in the second quarter of 2012.

The association and its consultant IHS Global Insight now believe that the rental sector in North America will grow by 8.2% to US$34.0 billion this year. This compares to the 8.6% forecast given in May this year, which was an increase on the 6.9% growth forecasts given in February.

Although slightly lower, the 8.2% figure represents a significant increase and shows that ARA continues to believe that the rental market will enjoy a good year in North America.

ARA said the growth was driven by a strong growth projection of 9% in the construction and industrial equipment segment to $22.7 billion and 8% in the general tool segment to $8.7 billion. The party and event sector is expected to grow 3.1% in 2012 to reach $2.6 billion in revenue.

The ARA's updated five-year forecast is for high single-digit growth in 2013 with double-digit revenue growth for the industry in 2014, 2015 and 2016 to reach total North American rental revenue of $51.7 billion in 2016. That compared to earlier predictions of $53.2 billion.

ARA has not changed its prediction that rental companies in North America will this year invest $9.85 billion in 2012, up more than 15% more than 2011.

This means investment in equipment as a percentage of sales is forecasted to be 31.7%. The percentage increase in equipment investment is expected to be even greater over the next three years.

"The equipment rental industry continues to be a leader in recovery of our economy. The growth rate we're seeing over 2011 is substantial, further demonstrating the significant value proposition that renting equipment has to offer," said Christine Wehrman, ARA's executive vice president and CEO.

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