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The ARA (American Rental Association) updated forecast indicates that the U.S. equipment rental industry’s growth will soften but still grow. Last quarter, the year-over-year growth was expected to be 7.6% in 2023 and 3.1% in 2024. The most current projections indicate 11.8% growth in 2023 totaling $71.5 billion in construction and general tool rental revenue. As for 2024, a 7.1% revenue increase is now expected.
This ARA forecast includes both traditional and specialty as the new industry measure. Last quarter, the association corrected the forecast that underestimated non-residential construction and “specialty rental” spending by at least 20%. That forecast and explanation is available here.
“We are more bullish this quarter than last quarter,” says Scott Hazelton, managing director at S&P Global. “We are seeing a decent uptick with inflation moderating and our projections are relatively similar — stagnant but strong. It’s important to note that there will be more growth in construction and industrial equipment (CIE) than in general tool.”
Earlier in the year, the forecast predicted a recession that did not materialize. While the first two quarters of the year proved slow, third quarter revenues are very strong, and the quarter four projections appear that way as well.
“The biggest change is in the general tool revenue projection,” Hazelton says. “This is probably a function of timing with manufacturing strikes and that the housing market has been more resilient than we thought it would be. People are renovating homes because they are staying in them, and home values are trending upwards so there is incentive to invest in their homes.”
Canadian equipment rental revenue growth is higher in 2023 compared to last quarter’s projections due to inflation and resilient demand.
The CIE outlook in Canada is slower growth with strong levels of activity in 2024, a 3.7% revenue increase making it a $4.5 billion industry with stronger growth anticipated in outbound years, 7.2% revenue increase in 2025 and 5.7% in 2026.
There are some very real issues with Canada’s housing market and that is the primary cause of the revenue decline in 2023, totaling $971 million. In 2024, the projected general tool revenue will total $963 million, a 0.9% decline from 2023.
The ARA quarterly member survey showed conflicting results amongst members with half of respondents saying they expect to see a revenue increase in quarter four and half expecting a revenue decrease.
This quarter there was also an increase in ARA members who believe the situation for business is more stagnant.