Rental industry stays on course for record revenues in 2016
By ARAFeatures Business Intelligence
June 14, 2016 - The American Rental Association (ARA) has released its second quarter outlook, which calls for continued revenue growth of 5.6 percent in 2016 and 4.9 percent in 2017 in the U.S.
The numbers are slightly modified when compared to the first quarter forecast, but continue to tell a positive story about equipment rental’s future.
Total revenue in the U.S., including the three segments of the equipment rental industry — construction/industrial, general tool, and party and event — in 2016 is expected to reach a record $47.9 billion and climb to an unprecedented $55.6 billion in 2019.
“Following the recession, we decided to update our forecast on a quarterly basis so that subscribers to the ARA Rental Market Monitor™ service would have up-to-date information to help with managing their businesses,” says Christine Wehrman, ARA’s CEO and executive vice president.
“Things can change so rapidly and a forecast can be quickly outdated, so we want to make sure we help ARA Rental Market Monitor subscribers and ARA members have the most up-to-date information to make the best decisions for their businesses moving forward. While there may not be a lot of variation quarter to quarter, it can help us spot trends faster and take advantage of market conditions,” Wehrman says.
The forecast for Canada now calls for a 2.2 percent decrease in total rental revenues to $4.83 billion because of a 2.9 percent decrease in construction and industrial equipment rental revenue in 2016. General tool is expected to show an increase of 0.8 percent and party and event is forecasted to be up 0.5 percent in 2016.
The trend in Canada is expected to reverse in 2017, with Canadian equipment rental revenue expected to show a 4.7 percent increase and grow in successive years to reach $5.64 billion in 2019.
In the U.S., several factors also pose potential risk to the industry’s growth, including unexpected government policy changes, oil price changes and more.
“The adjustments in our forecast reflect changes in the outlook for the entire economy. The fact that the equipment rental industry continues to have revenue growth more than double that of the U.S. economy as a whole underscores the positive aspects of this latest forecast by IHS,” says John McClelland, ARA vice president for government affairs and chief economist.
“The U.S. economy continues to expand. The wild card is that much of the global economy has failed to ignite. Sluggish growth from U.S. trading partners continues to weigh on oil prices, preserve the high value of the dollar and subdue business confidence in key industries,” says Scott Hazelton, managing partner, IHS Global Insight, Lexington, Mass., the respected global forecasting firm that compiles data and analyses for the ARA Rental Market Monitor.
“The lingering weakness in manufacturing and energy markets will limit rental revenue growth somewhat more than expected, but construction and home renovation remain strong. We have lowered the national growth rate by about 150 basis points, but the outlook remains fundamentally strong at about twice the growth rate of gross domestic product (GDP) in the U.S.,” Hazelton says.
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