February 19, 2024
In its updated forecast released at The ARA Show™, the American Rental Association (ARA) indicates that the United States equipment rental industry’s growth has a fairly positive outlook. Last quarter, the year-over-year growth was expected to be 7.6 percent in 2023 and 3.1 percent in 2024. The most current projections indicate a 7.9 percent increase in 2024 totaling $77.3 billion in construction and general tool rental revenue.
“The ARA Rentalytics™ quarterly forecast reinforces the strength of the rental industry,” says Tom Doyle, ARA vice president, program development. “Rental should benefit with tailwinds from interest rates, inflation, improving supply, a preference to rent, and government and private spending. Rental revenue is again forecasted to increase.”
Looking more granularly at construction and industrial equipment (CIE) growth in the United States, $60.9 billion is the projected revenue in 2024, which is 7.5 percent growth. In the coming years, 2025, 2026, and 2027, 3 percent growth is projected. The difference is smaller but still appreciable and more in line with a steadily growing economy.
“We see a slowing of growth this year compared to last year but bear in mind, we have a slowing of inflation this year as well,” says Scott Hazelton, managing director at S&P Global. “The growth rates tail off in the future years, with growth of 4.3 percent in 2025 and 3.9 percent in 2026.”
The current forecast for total Canadian equipment rental revenue shows a 3.1 percent growth to $974 million in 2024. 2024 growth is stronger in Canada than 2023 growth due to inflation and resilient demand. In addition, Canada’s housing market and non-residential structure construction are both improving.
While CIE investment will decline from previous years, a 7.2 percent increase is forecasted. The stark contrast from previous years is attributed to the lack of post-COVID investments in 2024.
As businesses choose rental over ownership, the CIE rental penetration rate follows. The 2023 estimate of 56.4 percent is near the pre-pandemic peak.
General tool investment in the United States is not quite as positive of an outlook. There is muted investment growth at 6.8 percent. Manufacturing is driving the growth and housing is still the weak spot.
“ARA’s quarterly member survey showed conflicting results amongst members with just over half of respondents saying they saw a revenue increase in quarter four, a slight improvement over quarter three which saw an even split between those an increase and decrease,” says Mike Savely, ARA director, program development.
It is worth noting that in current forecasts, no state in the United States has a decline in rental revenue growth in the next five years. There are states with weaknesses, but there is still growth.
