Weaker US rental revenue growth forecast

By Helen Wright09 August 2016

The American Rental Association (ARA) has downgraded its forecast for US rental revenues, and said it now expected 2016 US rental industry revenues to grow 4.9%, compared to its previous forecast of a 5.6% increase.

Nevertheless, the ARA’s Rental Market Monitor data gathering service said US rental industry revenues were still on course to total US$47.6 billion in 2016 (€43 billion), and to grow a further 4.6% in 2017 to reach US$49.8 billion (€45 billion). Its previous forecast was for 4.9% US rental revenue growth next year.

The ARA also said it currently expected the US equipment rental industry to see a compound annual growth rate in revenues of 4.9%, reaching a value of US$57.3 billion (€52 billion) in 2020.

Scott Hazelton, managing director, IHS Economics, the economic forecasting firm that compiles data and analysis for the ARA Rental Market Monitor, said US economic growth in the first half had not been as strong as previously expected because of uncertain growth overseas and the increasing value of the dollar.

“This also has been acerbated by uncertainty surrounding future policy direction from a muddled presidential campaign season,” Mr Hazelton said.

“However, construction remains strong, particularly in the residential sector, both new and home improvements. While nonresidential growth is slowing, we remain on track for another year of solid gains and consumer spending also remains strong.

“The slight adjustment in the forecast growth reflects the weaker view for US energy and manufacturing, while the still strong growth reflects the fact that the economic and construction fundamentals remain positive.”

The forecast for Canadian rental revenues was also revised – instead of projecting a decrease in total rental revenues in 2016 as it did in April, the ARA Rental Market Monitor now forecasts a 0.8% increase to US$5 billion (€4.5 billion).

It said rental revenues in Canada were currently expected to grow at a compound annual growth rate of 4.2% over the 2016 to 2020 period reaching a value of US$5.9 billion (€5.3 billion) in 2020, thanks to an expected rebound in residential and nonresidential construction.

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