The latest five-year forecast for the equipment rental industry projects a compound annual growth rate in revenue of 4.9 percent to reach $57.3 billion in the United States in 2020. The numbers in the forecast, updated at the end of July, have been slightly downgraded since April, reflecting changes in the marketplace. Projections show industry revenue to increase by 4.9 percent in 2016 to a record $47.6 billion and to grow another 4.6 percent in 2017 to reach $49.8 billion.
The new forecast for the first time extends the projections to 2020, showing steady revenue growth from 2016 through 2020 of between 4.6 percent and 5 percent each year.
These projections were released by the American Rental Association, which offers quarterly updates to its five-year forecast for equipment rental industry revenue. Its second quarter outlook, released last April, called for continued revenue growth of 5.6 percent in 2016 and 4.9 percent in 2017 in the U.S.
While the forecast has been adjusted to reflect changing market conditions, equipment rental continues to grow at more than double the rate of GDP growth.
Scott Hazelton, managing director, IHS Economics, says economic growth in the first half in the United States has not been as strong as previously expected because of uncertain growth overseas and the increasing value of the dollar.
“This also has been exacerbated by uncertainty surrounding future policy direction from a muddled presidential campaign season. 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 U.S. energy and manufacturing, while the still strong growth reflects the fact that the economic and construction fundamentals remain positive,” Hazelton says.
The biggest change to the new forecast concerns Canada. Instead of projecting a decrease in total rental revenues in 2016 as it did in April, the new forecast shows a 0.8-percent increase to $4.976 billion and total rental revenue in Canada is expected to grow at a compound annual growth rate of 4.2 percent over the 2016 to 2020 period.
While construction spending in Canada has been weak in 2016, resulting in the near flat equipment rental revenues, real residential and nonresidential construction are expected to rebound in 2017 and beyond, leading to a more positive forecast with equipment rental revenue in Canada expected to reach $5.859 billion in 2020.
