Posted October 20, 2020

Equipment rental volume continues to improve

M Science reports that real-time data on commercial and industrial equipment rentals and sales indicate Y/Y declines in equipment rental volume continues to improve.

Alex Prudhomme, lead industrials analyst at M Science, an alternative data-based investment research firm, highlights some early and telling suggestions on economic activity based on the data M Science has analyzed:

Overall rental equipment volumes have continued to improve throughout the course of the year, providing a positive indication on underlying construction activity. M Science data suggests underlying Y/Y declines in equipment rental volumes have moderated from late Q2 levels into the early fall. (Figure 1)

URI rental volume
Figure 1

Reservations for United Rentals (URI) online were up 10 percent Y/Y in the first full week of October, providing a constructive read on activity in early Q4. Due to growing share of online orders over time, M Science sources expect online reservations to outpace underlying volume growth on a Y/Y basis.

Fleet disposal efforts may have peaked, at least at URI, as used equipment listed for sale has reached the lowest level since March, after peaking in July. Rental houses went into the year expecting growth and are likely shrinking their fleets to right-size supply. It takes time to do this, but the amount of used equipment listed for sale at URI has begun to moderate, providing an early signal we might be past the worst in fleet reductions and getting closer to an equilibrium.

By product category, aerial work platforms have seen more notable price competition relative to earthmoving and material-handling equipment, suggesting non-residential building construction is lagging with infrastructure-related work. Importantly, regional pricing trends have most notably deteriorated in Q3 across the South and Southeast regions, which likely reflects continued high rates of Covid-19 infections, as well as reduced equipment rental from the travel and convention industries.