Q3 2019 Industrial Quarterly Newsletter

TKO Miller Market Analysis 

• TKO Miller’s proprietary Industrial and Construction Services Index (see below) has continued to trend upwards after a sharp decline in Q4 2018. M&A activity within the industrial sector remains strong as strategic acquirers pursue roll-up acquisition strategies to expand geographic footprints, fleet size, and service capabilities. Private equity activity has contributed to strong deal volume as financial buyers seek out both platform investments and add-on acquisitions to diversify portfolio company capabilities.
• Despite the strong M&A activity, international trade conflicts have led to concerns of a potential slow-down among heavy equipment manufacturers, and, in turn, rental and construction firms. In September, the PMI index (Purchasing Manager’s Index), an index of the direction of economic trends in the manufacturing and services sector, continued a six-month decline and reached its lowest reading since June 2009.
• Tight labor markets, rising material costs, and a particularly poor performance from the residential building sector is expected to lead to relatively flat growth for North America’s construction industry (0.4% - GlobalData) in the short term. However, the industry’s region is expected to regain momentum in the coming years through ongoing investments in national infrastructure development.

Industrial and Construction Services News

Growth Continues for Rental Equipment 

Despite some industry experts anticipating a slowdown, the American Rental Association expects the U.S. equipment rental industry to continue to grow consistently over the next few years, with total revenue for 2019 forecasted to surpass $61.3 billion, with increases of 5.0 percent for both the Unites States and Canada compared to 2018. Similar steady growth is expected in each of the successive years of the forecast to reach $69.8 billion by 2022 in North America while being expected to outpace the overall economy. [Link]

By Timothy Oleszczuk on Oct 11, 2019 7:05:00 AM