The American Rental Association is forecasting total revenue growth of 8.1 percent in the equipment rental industry to reach $38.5 billion in the United States, including construction/industrial, general tool, and party/event. ARA said a strengthened economy, growth in employment and lower gas prices will generate increased disposable income, leading to more equipment rental usage.
ARA is forecasting construction/industrial revenue to increase 8.5 percent in 2015 to $26 billion, with general tool projected to grow 8.3 percent to $9.9 billion this year. ARA projects party and event rental to hike 4.5 percent to $2.7 billion.
“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 Scott Hazelton, managing partner of IHS Inc., a leading global source of critical information and insight. IHS compiles data for the ARA Rental Market Monitor.
Hazelton noted that 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,” he said. “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.”
“The equipment rental industry continues to grow at a fast pace with strong equipment rental demand within all markets,” said Christine Wehrman, ARA 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. 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.”
While projected revenue increases for equipment rental from direct or indirect demand from the energy sector may be lower now than previously expected, Hazelton said, other rising segments will remain strong.
ARA expects 3.7 percent growth in Canada to $4.1 billion in 2015, with growth of 6.3 percent in 2016 to nearly $4.4 billion.