According to the American Rental Association’s most recent forecast, equipment rental industry revenues will experience steady gains over the next five years.

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

The current forecast calls for U.S. rental revenue to grow 4.7% in 2018, 5.1% in 2019, 4.6% in 2020 and 4.4% in 2021 and 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 the ARA.

“The equipment rental industry continues to post strong performance numbers with annual revenues closing in on 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 Q1/17 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. While it will moderate over the year, it will support significant rental potential,” Hazelton said. “Reduced headwinds from exchange rates and improving business confidence also are aiding the industrial sector and its equipment rental demands.”

Hazelton also said 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 said.

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% and 6.1%, respectively, between 2017 and 2012.

Construction and industrial equipment and general tool rental revenues are expected to grow at CAGRs of 4.7% and 4.3%, respectively, through 2021.