The new five-year forecast for equipment rental industry revenues released by the American Rental Association (ARA) continues to call for steady gains and expectations for growth are greater than in the February forecast.

ARA now projects U.S. equipment rental revenue to reach $49.4 billion in 2017, up 4.5 percent over last year. The February forecast projected U.S. equipment rental revenue of $48.9 billion in 2017 and an average annual growth rate of 4.6 percent to reach $56 billion in 2020.

The May 3 forecast calls for U.S. rental revenue to grow 4.7 percent in 2018, 5.1 percent in 2019, 4.6 percent in 2020 and 4.4 percent in 2021 to reach $59.4 billion combined for the three segments of the industry including construction/industrial, general tool/light construction and party/special event.

This is the second consecutive quarterly forecast to project stronger growth during the forecast period compared to the previous quarterly update of the ARA Rental Market Monitor™ subscription service by IHS Markit™, the economic forecasting firm that compiles the data and analysis as part of a partnership with ARA and RENTAL MANAGEMENT.

“The equipment rental continues to post strong performance numbers with annual revenues closing in in the $50 billion mark this year,” says John McClelland, ARA’s vice president for government affairs and chief economist.

“The issues going forward are how the Congress is going to deal with tax reform and infrastructure spending. If tax reform can lower rates and simplify the code for all businesses that could be a sign of even stronger growth and a strong infrastructure bill will add to that momentum,” McClelland says.

Scott Hazelton, managing director, IHS Markit, says weak first quarter numbers for the U.S. gross domestic product (GDP) masked solid demand for investment, which will help fuel growth in equipment rental revenues.

“Construction growth has remained robust. While it will moderate over the year, it will support significant rental potential,” Hazelton says. “Reduced headwinds from exchange rates and improving business confidence also are aiding the industrial sector and its equipment rental demands.”

Hazelton also says policy uncertainties continue to temper the forecast because of unknowns. “Good decisions could improve the outlook while poor ones could substantially diminish it. However, the trends to date suggest strong equipment rental demand for 2017, 2018 and beyond,” he says.

Despite sluggishness in nonresidential construction, contractions in real residential construction and uncertainty of additional infrastructure spending, the construction and industrial equipment segment and general tool rental segment are projected to achieve compound annual growth rates (CAGRs) of 4.1 percent and 6.1 percent, respectively, between 2017 and 2012, according to the ARA Rental Market Monitor.

In addition, party and event rentals will benefit from continued improvement in consumer spending and rental revenue is projected to show a 5.8 percent CAGR over the 2017 to 2021 period. Total equipment rental revenue is expected to grow at a CAGR of 4.7 percent between 2017 and 2021.

In Canada, the five-year forecast calls for accelerating revenue growth each year, starting with a 2.7 percent increase in 2017 to reach $5.12 billion. Total rental revenue is expected to grow another 3.1 percent in 2018, 4.2 percent in 2019, 5.3 percent in 2020 and 5.9 percent in 2021 to reach $6.13 billion.

Construction and industrial equipment and general tool rental revenues are expected to grow at CAGRs of 4.7 percent and 4.3 percent, respectively, through 2021. Party and event rental is expected to grow at a CAGR of 4.2 percent, benefitting from stable consumer spending and a rebound in corporate disposable income in Canada. Total rental revenue in Canada is pro9jected to grow at a CAGR of 4.6 percent between 2017 and 2021, according to the ARA Rental Market Monitor.