The American Rental Association (ARA) expects a stronger economy, employment growth, and lower gas prices at the pump, which will generate increased disposable income, all spell favorable news for consumers as well as the equipment rental industry in the United States.
Overall, the ARA, through its ARA Rental Market Monitor subscription service, forecasts that equipment rental industry total revenue will grow 8.1% in 2015, to reach $38.5 billion in the U.S. The growth will include all three segments of the rental industry: construction/industrial, general tool, and party/event.
Construction/industrial rental revenue is now forecast to increase 8.5% in 2015, to reach $26 billion, with general tool projected to grow 8.3%, to reach $9.9 billion, and party/event rental to increase 4.5%, to reach $2.7 billion.
“The equipment rental industry continues to grow at a fast pace with strong equipment rental demand within all markets,” says Christine Wehrman, ARA’s executive vice president and CEO.
“While the news focuses on the energy sector of the economy, our industry is fortunate to have a balanced marketplace in which rental is in demand and energy represents only one of those markets," Wehrman added. "Rental companies have always been flexible in meeting customer demand by adapting quickly to changing markets. The industry growth forecast remains more than double that of the overall economy.”
Scott Hazelton is managing partner at IHS Inc., a leading global source of critical information and insight. IHS compiles data for the ARA Rental Market Monitor. “The number of positive offsets in commercial construction, multi-family housing, healthcare, and manufacturing help to counteract the drop in oil prices and contribute to the strong 2015 growth projections for the equipment rental industry,” said Hazelton.
Also, a decrease in oil prices does not mean the energy sector growth stops. “Natural gas and oil extraction growth will likely be slower in 2015 and 2016, but it is important to note that extraction actually increases, just at a slower rate, even with lower oil prices,” said Hazelton.
Projected revenue increases for equipment rental due to more direct and indirect demand from the energy sector may be lower now than previously expected, but Hazelton said the other rising segments for the equipment rental industry will remain a positive factor for 2016 as well.
“IHS already had projected softness in the energy markets in 2016, so the quick drop in oil prices now presents less of a change in the overall forecast for the equipment rental industry,” said Hazelton.
The forecast for Canada calls for 3.7% growth in 2015, to $4.1 billion, with growth of 6.3% expected in 2016, to reach nearly $4.4 billion.
"We continue to monitor our industry on a quarterly basis to ensure that our members have the best information available in a changing economic environment,” says Wehrman.
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