The American Rental Association (ARA) adjusted its five-year rental revenue forecast to again project greater gains, estimating that rental revenues in North America will exceed $71.7 billion in 2022, including $65.4 billion in the United States and $6.3 billion in Canada.
“We continue to see strong growth in rental revenues through 2018 and into 2019 due to the strong performance of the U.S. economy,” says John McClelland, Ph.D., ARA vice president for government affairs and chief economist. “Our forecast for 2019 does indicate slower growth than we have experienced in 2018 because the U.S. economy is projected to grow at a slower rate than in 2018. However, in both cases, rental revenues are expected to grow at higher rates than the economy."
In the U.S., equipment rental revenue is expected to finish 2018 at $53.04 billion, up 7.6% over 2017. Revenue is forecast to grow another 5.5% in 2019, 5.9% in 2020, 5.1% in 2021 and 4.7% in 2022. While the construction/industrial segment remains the largest, its growth rates of 5.6% in 2019, 5.3% in 2020, 4.4% in 2021 and 4% in 2022 to $44.85 billion pace below the percentage of revenue increases for general tool — 6.2% in 2019, 7.7% in 2020, 7% in 2021 and 6.7% in 2022 to reach $16.34 billion.
Scott Hazelton, managing director, IHS Markit, the forecasting firm that compiles data and analysis for ARA Rentalytics as part of a partnership with ARA, said the biggest surprise of the updated forecast has been the resiliency of the U.S. economy.
“After several years of temperate growth, it weathered an energy price hike and then an energy price collapse without significant ill effect,” Hazelton said. “While one has to constantly be aware of the warning signs of a downturn, nothing appears imminent.”
U.S. investment in rental equipment also is expected to be steady over the forecast period, increasing 2.6% in 2019 to $14.3 billion, adding another 4.5% in 2020 and then slowing to growth rates of 1.7% in 2021 and 1.3% in 2022, reaching $15.4 billion.
“Our biggest concerns going forward are the continuing negative effects of tariffs on the rental industry, both from the increasing costs of equipment for all rental segments and construction equipment, as well as the overall fiscal drag that is caused by tariffs,” McClelland said.
In Canada, rental revenue is forecast to grow 4.3% in 2018 to total $5.4 billion and then continue to expand with revenue increases of 4.8% in 2019, 4.7% in 2020, 3.8% in 2021 and 2.6% in 2022 to total $6.3 billion.
For more information, visit www.ararental.org.
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