Rental revenue continues to gain strength in North America
The American Rental Association (ARA), for the second quarter in a row, is projecting larger increases in revenue almost across the board for the equipment and event rental industry than it did in the previous five-year forecast released in May.
The July 2018 forecast from ARA Rentalytics calls for total U.S. rental revenue of $53.04 billion in 2018, up 7.6 percent, and then growing 5.8 percent in 2019, 5.9 percent in 2020, 5.1 percent in 2021 and 4.7 percent in 2022 to reach $65.4 billion.
The May forecast called for total U.S. rental revenue of $52.3 billion in 2018 growing to $64.1 billion in 2022.
"ARA's second quarter forecast shows continued strong growth in rental revenues over the forecast period. Growth rates for 2018 and 2019 look particularly strong in all segments of the equipment and event rental industry with growth rates forecast at more than double the rate of GDP [gross domestic product] growth," says John McClelland, Ph.D., ARA's vice president, government affairs, and chief economist.
While the near-term outlook is particularly strong, McClelland said the out-years of the forecast could be subject to change due to the potential impact of tariffs on the economy and construction projects.
"Coupled with the increases in equipment prices that are almost inevitable after the imposition of tariffs on steel and aluminum, the equipment and event rental industry could face a challenging economic climate beginning in 2020 and beyond," McClelland says.
According to ARA Rentalytics, construction and industrial equipment rentals continues to account for the bulk of revenue in equipment and event rental and now is expected to reach $37.15 billion in 2018, up 8.3 percent over last year. General tool rental revenue in 2018 is forecast to be $12.49 billion, up 5.4 percent. Party and event revenue is expected to reach $3.4 billion in 2018, up 8.8 percent.
ARA also forecasts total investment in equipment by rental companies to reach $13.9 billion in 2018, up 7.8 percent over 2017.
In Canada, the forecast is for $5.4 billion in revenue in 2018, up 4.4 percent, with 4.8 percent growth in 2019, 4.7 percent in 2020, 3.8 percent in 2021 and 2.7 percent in 2022 to reach $6.159 billion.