The latest five-year forecast from the American Rental Association (ARA) projects that rental revenues in North America will surpass $61.5 billion in 2019, up 5.3% compared to 2018.
Similar steady growth is expected in each of the successive years of the forecast to reach nearly $70.9 billion in revenue by 2022.
The current figures, which are updated quarterly, project slightly less growth than what was forecast in October, reflecting different factors that have slightly slowed the projected growth of the U.S. economy.
“This remains a strong forecast for a growing industry that continues to expand faster than the overall economy,” said John McClelland, Ph.D., ARA vice president for government affairs and chief economist.
In the U.S., rental revenue is expected to grow another 4.8% in 2020, 5%in 2021 and 4.8% in 2022 to reach $64.4 billion.
Rental penetration — the percentage of total construction equipment in use in the United States that is owned by equipment rental companies — increased to 53.5% in 2018, up from 53% in 2017.
“Rental operators are anticipating another good year but have remained disciplined around adding inventory,” McClelland said. LThe effect of better fleet management is that minor fluctuations in the business cycle will not be overly disruptive to the rental industry.”
Scott Hazelton, managing director of IHS Markit, the forecasting firm that compiles data and analysis for the ARA Rentalytics subscription service as part of a partnership with ARA, says real gross domestic product (GDP) growth in the U.S. is expected to be 2.5% in 2019 compared to 2.9% in 2018, resulting in the mild softening of the near-term growth outlook.
“The slightly lower increases projected in the new forecast are the result of slightly lower economic expectations,” Hazelton said. “IHS Markit has lowered its GDP outlook marginally for 2019 and 2020, but this is not due to worries about a dramatic decline in the economy, but a recognition that trade policy has had some negative consequences, particularly in the manufacturing sector, and that the stimulus from tax cuts is wearing off for both consumers and businesses.”
Most of the global economy also continues to slow, he said.
“Yet domestic employment gains in the U.S. remain strong and while purchasing manager indexes have retreated, they remain in expansion territory,” Hazelton said. “The outlook still is positive,” he says.
In Canada, rental revenue is forecast to grow 4.6% in 2019 to total nearly $5.7 billion and then continue to expand with revenue increases of 5.8% in 2020, 4.8% in 2021, and 2.8% in 2022 to total nearly $6.5 billion.
For more information, visit www.ararental.org.
Lift & Access is part of the Catalyst Communications Network publication family.
