November 17, 2015
Equipment rental industry five year forecast calls for even growth
U.S.--The American Rental Association (ARA) latest forecast calls for equipment rental industry revenue growth in the United States of 6.7 per cent in 2016 and 2017, 6.2 per cent in 2018 and 5.8 per cent in 2019 to reach $48.7 billion.
The growth pace is slightly more moderate than the previous two years, but the industry’s progress is consistently positive regardless of changes in oil and gas, construction and other segments equipment rental companies serve.
“The performance of the equipment rental industry since the recession has been very positive and as auxiliary industries recover and grow, we anticipate equipment rental revenue growth to meet the forecast of the next five years,” says Christine Wehrman, ARA CEO and executive vice president.
“This means equipment rental companies can prepare for steady growth, plan for expanding their markets and build inventory to meet their customer demand. The forecast also shows that many customers who have turned to renting equipment during and after the recession have seen the benefits and will continue to rent to control their costs,” Wehrman says. “The secular shift to rental is here to stay.”
The economic analysis from the ARA Rental Market Monitor™ subscription service suggests that the ongoing rebound in real residential construction in 2015 will help fuel the growth in the construction and industrial equipment and the general tool rental segments.
“A 2015-19 compound annual growth rate (CAGR) of 2.7 per cent is projected for real total construction with real nonresidential growing 1.0 per cent and real residential growing 5.7 per cent. This will drive revenue growth in the construction and industrial segment and the general tool segment, which will average annual revenue increases of 6.5 per cent and 6.7 per cent respectively, over the period,” according to the latest analysis provided by IHS Economics, the forecasting firm that provides data and analyses for the ARA Rental Market Monitor.
According to the ARA Rental Market Monitor, party and event rentals will “benefit from continued improvement in consumer spending and rental revenue is projected to show a 2.6 per cent CAGR over the 2015-19 period. Total equipment rental revenue is expected to grow at a CAGR of 6.3 per cent between 2015 and 2019, reaching $48.7 billion in 2019.”
The short-term forecast for Canada is more subdued in 2016, with expectations of 0.8 per cent growth in equipment rental revenue to reach $4.98 billion, with a greater rebound of 5.7 per cent in 2017, 6.3 per cent in 2018 and 5.6 per cent in 2019 to reach $5.9 billion.
“Lower oil prices will put some downward pressure on oil sands investment, but prices are expected to bottom out above the point at which oil sands become unprofitable and will rise steadily to over $80 a barrel by the end of 2018,” according to the ARA Rental Market Monitor.
In Canada, according to the ARA Rental Market Monitor, “even with the modest outlook for construction markets, construction and industrial equipment and general tool revenues are expected to grow at CAGRs of 4.7 per cent and 4.3 per cent, respectively, through 2019. Party and event rental is expected to grow at a CAGR of 3.6 per cent, benefitting from increases in overall consumer spending, as well as growth in consumer expenditures on services. Total rental revenue is projected to grow at a CAGR of 4.6 per cent over the 2015-19 period.”