The year has started on a somewhat downbeat note, according to respondents to the first quarter ERA/IRN RentalTracker survey, with optimism slipping across Europe on all questions.
Nevertheless, the majority of respondents report steady business conditions – answering ‘stable’ or ‘no change’ to the survey questions. This has often been the case with previous surveys too.
Indeed, this trend reflects wider economic conditions across Europe. In fact, the International Monetary Fund has labelled slowing growth in advanced economies ‘the new normal’.
As a result of this shift towards less dramatic trends, the ERA/IRN RentalTracker survey (which is jointly organised by IRN and the European Rental Association) will no longer take place every quarter, and instead will be presented twice a year – see box story for the full details.
There were around 80 respondents to the first quarter questionnaire, still enough to highlight general trends, but not enough to present meaningful results for every country or region. For example, we are unable to present results for the Benelux this quarter.
The statistics for multinational companies should also be treated with a degree of caution because of the small size of the data set as well.
That said, the overall impression from respondents was a dip in confidence, with the balance of opinion (the difference in the percentage of respondents seeing positive and negative trends) on business conditions at the end of the first quarter dropping to +18%, compared to +34% for the final three months of 2015.
French respondents came in at the low end of the ranking, with a negative balance of -22% compared to +5% in the last survey, while German respondents came out on top at +43%, albeit lower than the balance of +56% produced for the same question in the last survey.
And there was a dramatic swing when it came to sentiment from multinationals on current conditions – with a balance of +34%, compared to +83% in the last survey. Again, please note these results are from a smaller sample.
But the majority of overall respondents (43%) said that they felt business conditions were stable – a central trend throughout the survey, as we have discussed.
Meanwhile, year-on-year 37% of all those questioned reported growth in the first quarter of this year compared to last. For the fourth quarter, 52% of respondents reported better business conditions year-on-year, while 38% of respondents to the first quarter 2015 survey reported improving business conditions. The majority of those questioned reported stable conditions.
Spanish respondents were most confident, with 59% reporting year-on-year growth in the first quarter, while France again found itself at the bottom of the list with 14% of respondents reporting growth. The balance of opinion for Europe was +15% for this question, but again the majority of respondents (42%) said conditions were the same as a year ago.
Investment intentions are a key metric for the health of the industry, and for this question there was stability compared to the last survey, with 39% of overall respondents expecting to increase investment by at least 10% in 2016, compared to 38% of respondents to the same question in the last survey.
French, German and Nordic respondents came in below the European total, with 29%, 17% and 20%, respectively, expecting to increase investment by at least 10% this year. Multinationals, Spain, UK and Italy came in above the overall total, with Spain consistently emerging as one of the more confident countries in this survey.
Of course, this needs to be seen in the context of an improvement after six years or more of recession. This continues a recovery trend seen in Spain across the last 12 months of RentalTracker surveys.
Meanwhile, nearly 50% of respondents to the question on investment intentions said they planned to maintain the same level of investment as last year – a clear positive, particularly in a slow growth environment.
The same is true of employment intentions, where 61% of those questioned said they would maintain the same level of employees going into the second quarter of 2016, while 31% said they planned to employ more staff. The most optimistic countries on employment intentions were Germany, multinationals, UK and Spain, while countries below the European average where the Nordics, Italy and France at the bottom.
Looking ahead, 43% of all those surveyed said they expected business to be either better or much better 12 months down the line, with the UK coming in as by far the most positive - here, 86% of respondents forecast better conditions next year.
Multinationals were also confident, as were Italians. On the other side, however, just 27% of French respondents forecast improving business conditions in 12 months’ time, with Germany, Nordic regions and Spain also looking pessimistic.
Nevertheless, 50% of overall respondents said they expected business conditions to remain stable in a year’s time. And this is the key takeaway from the first quarter survey – while the most optimistic respondents do appear to have been knocked back somewhat, the majority report and continue to expect business conditions to remain steady.
Changes to survey
The European Rental Association (ERA) and International Rental News (IRN) are to reduce the frequency of the ERA/IRN RentalTracker from four surveys a year, to two a year.
Having two surveys will reduce the burden on rental companies to respond to surveys and still provide important information at crucial times of the year.
ERA secretary general Michel Petitjean said, “The rental market is changing less rapidly than in the years after we created the ERA/IRN RentalTracker – the first survey was in the second quarter of 2009. This means there is less of a need to track the market every 12 weeks. We are also sensitive about not burdening rental companies and associations with too many surveys.
“The new survey timings, meanwhile, will give the industry an insight into business conditions following the winter and summer seasons. We urge all rental companies to continue to support the ERA/IRN RentalTracker.”
This is a preview of the first quarter 2016 ERA/IRN RentalTracker survey. The full report, with extra graphs and analysis, will be published in the June issue of IRN.