Canada’s equipment rental revenue forecast improves for 2019

equipment rental

Revenue from equipment rental in Canada is expected to grow 2.1 per cent to reach about $5.5 billion in 2019, according to the ARA (American Rental Association).

The ARA updates its five-year equipment rental forecast every quarter. The latest Canadian projection, released on Aug. 19, represents a $200 million increase from the projected $5.3 billion forecast issued in May.

Equipment rental revenue is expected to continue an upward trend until 2023 in Canada. In 2020, the ARA forecasts a growth of 4.9 per cent, followed by growth of 5 per cent in 2021, 3.6 per cent in 2022 and 2.2 per cent in 2023 to reach $6.4 billion.

The current figures also represent slightly less growth through to 2022 than what was forecast in May.

“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,” said 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 per cent.”

The first equipment rental forecast for 2023

The forecast is ARA’s first to project equipment rental revenue for 2023. The new stats call for equipment and event rental revenues in North America to surpass $71 billion in 2023, including $64.7 billion in the United States.

For 2019, equipment and event rental revenue in the United States is now expected to reach $55.7 billion, up 5 per cent compared to 2018, with growth in 2020 and 2021 at 3.8 per cent; 4.1 per cent in 2022; and 3.3 per cent in 2023 to top $64.7 billion.

Scott Hazelton, managing director of IHS Markit, the forecasting firm that compiles data and analysis for the ARA, explained the American economy continues to decelerate this year as the stimulus from prior tax and budget incentives diminish.

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“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. This uncertainty is likely to persist into 2020, and become further complicated by the Presidential election cycle,” Hazelton said.

“The result is a modest reduction in our near-term economic outlook, particularly for the construction and manufacturing segments on which rental depends. We have slightly lowered our expectation for rental revenue growth, but we are not expecting a downturn.”