The latest five-year forecast for equipment rental industry revenues released by the American Rental Association projects United States equipment rental revenue to reach $49.4 billion in 2017, a 4.5-percent increase compared to 2016. The forecast is higher than the February forecast which 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 total $59.4 billion for the construction/industrial, general tool/light construction and party/special event rental industry segments.

The forecast is the second consecutive quarterly forecast to project stronger growth during the forecast period than the previous quarterly update.

“The equipment rental [industry] continues to post strong performance numbers with annual revenues closing in in the $50 billion mark this year,” said 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.”

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

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

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

According to the ARA Rental Market Monitor, despite sluggishness in nonresidential construction, contractions in real residential construction and the uncertain situation regarding additional infrastructure spending, the construction and industrial equipment segment and general tool rental segment are projected to achieve compound annual growth rates of 4.1 percent and 6.1 percent, respectively, between 2017 and 2021.

Party and event rentals will benefit from continued improvement in consumer spending.

Rental revenue is projected to show a 5.8 percent compound annual growth rate during the 2017 to 2021 period.

In Canada, the five-year forecast calls for accelerating revenue growth each year, starting with 2.7 percent in 2017 to reach $5.12 billion, followed by 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 4.2 percent. Total rental revenue in Canada is projected to grow at a CAGR of 4.6 percent between 2017 and 2021, ARA said.