The equipment rental industry will set an industry record for revenues in 2015 according to the latest industry forecast from the American Rental Association, despite reduced demand for equipment in oil patch drilling sites. Rental companies historically are able to adapt to changing market conditions, shifting inventory and moving equipment to where demand is greater. Increased activity in construction as well as party and event market segments are offsetting the decline in opening new sites for drilling.
The new quarterly ARA forecast from its ARA Rental Market Monitor subscription service has been modified slightly from February with total revenue growth of 7.9 percent expected in 2015 to reach a record $38.5 billion in the United States, including construction/industrial; general tool, and party and event.
ARA’s current five-year forecast calls for steady growth of 7.2 percent in 2016, 8 percent in 2017, 7.9 percent in 2018 and 6.8 percent in 2019 to reach $51.3 million.
“Even as several forces, including harsh weather, held back U.S. economic growth in gross domestic product to 0.2 percent in the first quarter, total rental revenue was up 4.9 percent in the same time period and is expected to exceed 9 percent in the second half of the year,” said Christine Wehrman, ARA’s executive vice president and CEO.
Global forecasting firm IHS Economics and Country Risk, which compiles data for ARA, is now forecasting construction/industrial rental revenue to increase 8.2 percent in 2015 to $25.9 billion, with general tool projected to grow 7.9 percent to $9.8 billion this year and party event to show a 4.7 percent increase to $2.7 billion.
“The equipment rental industry will achieve its new peak level as the result of a prolonged gradual improvement in the economy as a whole, and construction, industrial and consumer markets in particular,” said Scott Hazleton, managing director of IHS. “There was also some lift from energy markets, which are slowing, but the majority of the growth has come from solid fundamentals. Given a current level of activity based on solid ground, an economy that continues to improve will lead to rental revenues that are achievable and lasting.”