Equipment rental in Canada is expected to grow by 4.3 per cent this year, reaching $5.4 billion, according to the American Rental Association (ARA).
The ARA recently released an update to its five-year forecast, detailing equipment rental growth in Canada and the United States.
Rental growth in Canada will continue beyond 2018, with revenue increases of 4.8 per cent in 2019, 4.7 per cent in 2020, 3.8 per cent in 2021 and 2.6 per cent in 2022 to total $6.3 billion.
The latest quarterly forecast again projects greater revenue gains than the previous forecast released in late May, when Canadian revenue was predicted to reach $6.159 billion.
In the United States, the equipment rental industry is expected to reach $65.4 billion in 2022.
“We continue to see strong growth in rental revenues through 2018 and into 2019 due to the strong performance of the U.S. economy,” said John McClelland, Ph.D., ARA vice president for government affairs and chief economist.
“Our forecast for 2019 does indicate slower growth than we have experienced in 2018 because the U.S. economy is projected to grow at a slower rate than in 2018. However, in both cases, rental revenues are expected to grow at higher rates than the economy.”
In the United States. equipment rental revenue is expected to finish 2018 at $53.04 billion, up 7.6 per cent compared to 2017. Revenue is forecast to grow another 5.5 per cent in 2019, 5.9 per cent in 2020, 5.1 per cent in 2021 and 4.7 per cent in 2022.
Scott Hazelton, managing director, IHS Markit, the forecasting firm that compiles data and analysis for ARA Rentalytics, explained the biggest surprise of the updated forecast has been the resiliency of the American economy.
“After several years of temperate growth, it weathered an energy price hike and then an energy price collapse without significant ill effect,” Hazelton said. “While one has to constantly be aware of the warning signs of a downturn, nothing appears imminent.”
The construction/industrial rental segment will grow 5.6 per cent in 2019, 5.3 per cent in 2020, 4.4 per cent in 2021 and 4 per cent in 2022. American
investment in rental equipment also is expected to be steady throughout the forecast period, increasing 2.6 per cent in 2019 to $14.3 billion, adding another 4.5 per cent in 2020 and then slowing to growth rates of 1.7 per cent in 2021 and 1.3 per cent in 2022, reaching $15.4 billion.
“Our biggest concerns going forward are the continuing negative effects of tariffs on the rental industry, both from the increasing costs of equipment for all rental segments and construction equipment, as well as the overall fiscal drag that is caused by tariffs,” McClelland said.