ARA: Equipment Rental Industry Forecast Indicates Signs of Improvement

With its quality membership of dealers, rental lots, manufacturers and media outlets, the American Rental Association is one of the most important voices in the equipment rental industry (especially with its great magazine Rental Management). With its ears continually to the ground, and its eye looking ahead, the organization just released its State of the Equipment Rental Industry Outlook, which is one of the sector’s best future indicators.

The leading economic forecasting firm, IHS Global Insight, prepared the report for ARA and Rental Management, and its highlights include signs of recovery from the national recession, which is much needed news after June’s job reports and construction forecasts.

“The outlook report indicates that, the worst may be over for the equipment rental industry,” says Christine Wehrman, CEO, American Rental Association. “The U.S. economy is proving its resilience with growth returning to many sectors. However, construction spending continues to lag behind the rest of the economy. While construction spending is weak, spending on rental is beginning to grow and is leading the way in the construction space. We see the equipment rental industry gaining momentum in 2010 and 2011, with significant growth moving into 2012. These are positive signs for the entire economy as manufacturers, service providers and other vendors begin their budget planning for 2011 in the coming weeks and months.”

“Although nonresidential construction, state and local spending remain down, other areas of the U.S. construction market have begun to rebound. With business equipment investments surging, almost $6 billion in stimulus money flowing into the economy in 2010 and consumer confidence driving increased demand, the equipment rental industry is poised to gain strength in Q3 and Q4, with improvement in all categories forecasted for 2011,” says Wehrman.

The equipment rental industry is made up of three general market segments: Construction & Industrial Equipment, General Tool and Party & Event. Influenced by the decline in both residential and nonresidential construction spending, the Construction & Industrial Equipment market has been hit hardest by the recession. Economic indicators show that employment in the construction industry has increased significantly with the onset of the 2010 construction season.

“This is a positive sign for the equipment rental market as cautious contractors will increase their equipment fleets through short-term and long-term rentals to keep employees productive,” says Wehrman.

According to IHS Global Insight, even though General Tool did not take as hard of hit as the Construction & Industrial Equipment market in the recession, it did decline as consumers postponed planned home improvement and do-it-yourself projects during the recession. Although new housing starts remain low, residential construction has noticeably increased in the past year and is forecasted to continue its recovery over the year as consumers are now willing to spend money on updating or repairing their homes.

“With consumer confidence growing homeowners and small business owners will rely on their rental stores to supply them with the tools they need to get these delayed projects started in 2010,” says Wehrman.

Expanded coverage on Party & Event equipment rentals and more research for ARA’s State of the Equipment Rental Industry Outlook, visit ARA at https://www.ararental.org/Home.aspx