North American rental growth slows further

12 November 2019

Although the American Rental Association (ARA) has once again slightly downgraded its quarterly growth forecast for the North American equipment and event rental industry, compared to its August forecast, rental revenues are still expected to outpace economic growth.


In the US in particular, annual GDP (gross domestic product) growth slowed from 3.1% in the first quarter to 2% in the second quarter of the year. The GDP growth rate in the third quarter is estimated to be 1.9%.

According to IHS Markit, the forecasting firm that compiles data for ARA and its ARA Rentalytics subscription service, new tariffs on US-China trade flows and diminishing fiscal stimulus could contribute to a slowdown in annual real GDP growth from 2.3% in 2019 to 2% in 2020 and 2021, and 1.7% in 2022.

“Despite signs of a slowing economy, the equipment and event rental industry continues to perform well. The most important thing for rental companies to do is continue to execute their business plans and aggressively manage their operations,” says John McClelland, ARA Vice President for Government Affairs and Chief Economist.

He added, “With chances of a recession in the next 12 months relatively low at 35%, rental businesses should be able to continue to grow revenues and maintain strong balance sheets.”

Scott Hazelton, Managing Director, IHS Markit, added to this saying the next 12 to 18 months will feature significant uncertainty around trade and fiscal policy, compounded by the US elections.

“Rental firms are well positioned for uncertain times. The reluctance of construction and industrial companies to invest in new equipment under these circumstances, combined with a still expanding economy, suggests that the opportunities for equipment rental will continue to grow, albeit at a slower pace than the past few years,” Hazelton said.

Equipment and event rental industry in North America is expected to finish the year with total revenue up 5.35% to $61.56 billion. This will be the first time the combined rental revenues for Canada and the US have surpassed $60 billion.

Within that, US rental revenues are expected to be just over $56 billion and Canadian revenues are forecast to slightly exceed $5.5 billion, in 2019.

Rental revenues are expected to continue growing over next four years to reach $64.1 billion in 2023 – and for Canada specifically to reach $6.35 billion.

According to the ARA, construction equipment rental in the US is forecast to grow by 5.2% in 2019, 2.3% in 2020, 3% in 2021, 3.7% in 2022 and 3.1% in 2023 to reach $43.9 billion.

The growth rates for general tools are 6.8% in 2019, 3.8% in 2020, 3.96% in 2021, 5.2% in 2022 and 2.9% in 2023, reaching $15.7 billion.

Investment in equipment by rental companies in the US is expected to remain relatively flat each year with small declines in spending in 2020 and 2021, followed by slight increases in 2022 and 2023, reaching $14.55 billion.

In Canada, equipment and event rental revenue is expected to increase by 2.4% in 2019, 3.4% in 2020, 4.6% in 2021, 3.2% in 2022 and 2.7% in 2023 to reach $6.36 billion.

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