A strengthened economy, growth in employment and lower gas prices at the pump, generating increased disposable income, all spell favorable news for consumers as well as the equipment rental industry in the United States.
Overall, the American Rental Association (ARA), through its ARA Rental Market Monitor™ subscription service, forecasts equipment rental industry total revenue growth of 8.1 percent in 2015 to reach $38.5 billion in the U.S., including all three segments — construction/industrial, general tool, and party and event.
Construction/industrial rental revenue is now forecast to increase 8.5 percent in 2015 to $26 billion, with general tool projected to grow 8.3 percent to $9.9 billion this year and party event to show a 4.5 percent increase to $2.7 billion.
“The equipment rental industry continues to grow at a fast pace with strong equipment rental demand within all markets,” says Christine Wehrman, ARA’s executive vice president and CEO. “While the news focuses on the energy sector of the economy, our industry is fortunate to have a balanced marketplace in which rental is in demand and energy represents only one of those markets. Rental companies have always been flexible in meeting customer demand by adapting quickly to changing markets. The industry growth forecast remains more than double that of the overall economy.”
“The number of positive offsets in commercial construction, multifamily housing, healthcare and manufacturing help to counteract the drop in oil prices and contribute to the strong 2015 growth projections for the equipment rental industry,” says Scott Hazelton, managing partner, IHS Inc. (NYSE: IHS), a leading global source of critical information and insight and the company that compiles data for the ARA Rental Market Monitor.
Also, a decrease in oil prices does not mean the energy sector growth stops. “Natural gas and oil extraction growth will likely be slower in 2015 and 2016, but it is important to note that extraction actually increases, just at a slower rate, even with lower oil prices,” says Hazelton.
Projected revenue increases for equipment rental due to more direct and indirect demand from the energy sector may be lower now than previously expected, but Hazelton says the other rising segments for the equipment rental industry will remain a positive factor for 2016 as well.
“IHS already had projected softness in the energy markets in 2016, so the quick drop in oil prices now presents less of a change in the overall forecast for the equipment rental industry,” says Hazelton.
The forecast for Canada calls for 3.7 percent growth in 2015 to $4.1 billion, with growth of 6.3 percent expected in 2016 to nearly $4.4 billion.
“We continue to monitor our industry on a quarterly basis to ensure that our members have the best information available in a changing economic environment,” says Wehrman.