While projecting a positive picture rental growth in the long term, the American Rental Association adjusted its 2019 forecast slightly downward from its forecast in May.
ARA and its research partner HIS Markit now say that U.S. equipment and event rental revenues will be about $55.7 billion. While this is still up 5 percent over 2018 numbers, it is slightly lower than the $55.8 billion projected in ARA’s May forecast. It’s also the third drop in ARA’s quarterly rental forecast.
U.S.-only rental revenue growth for 2020 and 2021 is now expected to be at 3.8 percent; 2022 will see 4.1 percent growth and 2023 will see 3.3 percent growth, or $64.7 billion, says ARA.
U.S and Canada combined rental revenues in 2023 – which ARA is reporting for the first time — are projected to surpass $71 billion, including $64.7 billion in the U.S. and 6.7 billion in Canada.
“The market for the equipment and event rental industry remains positive, but there definitely are signs that the U.S. economic growth is slowing and this projected slowdown is reflected in our latest forecast,” says John McClelland, ARA vice president for government affairs and chief economist.
“Trade tensions and a slowdown in the global economy are headwinds for the economy with the risk of a recession happening in the U.S. within the next 12 months at about 35 percent,” McClelland says.
Scott Hazelton, managing director, IHS Markit, says the U.S. economy continues to decelerate this year as the stimulus from prior tax and budget incentives diminish.
“This has been exacerbated by still ongoing uncertainty over trade and tariff policy, particularly with China, and concern over the strength of the global economy,” Hazelton says. “This uncertainty is likely to persist into 2020 and become further complicated by the Presidential election cycle.
“The result is a modest reduction in our near-term economic outlook, particularly for the construction and manufacturing segments on which rental depends,” Hazelton continues. “We have slightly lowered our expectation for rental revenue growth, but we are not expecting a downturn,” Hazelton says.
In Canada, rental revenue is forecast to grow 2.1 percent in 2019 to total nearly $5.5 billion.