Posted March 2, 2016

ARA forecasts stable growth for 2016

Projects 6.6% growth this year, 5.6% next year.

The American Rental Association's (ARA) latest forecast calls for "stable growth" with total rental revenue increases of 6.6 percent in 2016 and 5.6 percent in 2017. It reflects the declining investment in energy markets and continued growth in residential and nonresidential construction.

“There is no doubt that the secular shift to renting equipment continues in the markets those in the equipment rental industry serve. Many customers continue to take advantage of the benefits that equipment rental offers,” said Christine Wehrman, ARA’s CEO and executive vice president.

ARA’s latest forecast, with data compiled by IHS Economics, one of the world’s most respected economic research firms, shows an even stronger story for the growth of the equipment rental industry because revenue totals have been revised upwards to reflect the latest data recently released by the federal government from the 2012 U.S. Economic Census.

According to the revised figures, total rental revenue — including construction/industrial, general tool/homeowner and party/special event — in 2012 was $36.5 billion compared to the previous estimate of $31.3 billion. The forecast for 2016 is now $48.2 billion and up to $53.7 billion in 2019.

“Large revisions in the Economic Census are not uncommon since it is conducted once every five years and has a 100 percent sampling of U.S. companies,” said Scott Hazelton, managing director, IHS Economics.

He added that residential construction is expanding, nonresidential is showing strong growth and commercial construction remains fundamentally strong, but its growth rate will fall from double-digits to high single digits. Plus, the Highway Bill has improved the outlook for infrastructure-related spending.

Rental penetration, however, decreased slightly in 2015 to 52.9 percent from 2014’s 53.9 percent, according to the latest ARA Rental Penetration Index. That rate decreases if rental firms aquire fleet slower than contractor or divest equipment fast than contractors. The data show fleets grew in 2015, but at a slower rate, Hazelton said.

You can find the ARA's new release here