ARA predicts growth will soften

In its updated forecast, the American Rental Association (ARA) predicts the U.S. equipment rental industry’s growth will soften. For 2024, the company now expects a 7.1% revenue increase. The most current projections indicate 11.8% growth in 2023 totaling $71.5 billion in construction and general tool rental revenue.

This forecast includes both traditional and specialty as the new industry measure. Last quarter the association corrected the forecast that underestimated non-residential construction spending by at least 20% and ‘specialty rental’ in overall rental revenues. 

“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 group’s 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 for slower growth with strong levels of activity in 2024, specifically a 3.7% revenue increase. That would make it a $4.5 billion industry with stronger growth anticipated in outbound years, a 7.2% revenue increase in 2025 and 5.7% in 2026.

The company says the primary cause of Canada’s revenue decline in 2023, totaling $971 million is caused by very real issues with Canada’s housing market. In 2024, the projected general tool revenue will total $963 million, a 0.9% decline from 2023.

ARA’s 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, an increasing number of members believe the situation for business is more stagnant.

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