ARA Revises Forecast Upward

The American Rental Association has revised upward its previous sales forecast for the U.S. rental industry, now predicting a 7.9% increase in tool rental revenue, that’s a total of $77.3 billion.  

“The ARA Rentalytics quarterly forecast reinforces the strength of the rental industry,” says Tom Doyle, ARA vice president, program development when the group released its updated forecast at The ARA Show. “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.”

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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% growth. In the coming years, 2025, 2026, and 2027, the group projects 3% growth. 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% in 2025 and 3.9% in 2026.”

While CIE investment will decline from previous years, ARA forecasts a 7.2% increase. The group attributes the stark contrast from previous years 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% 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%. 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.

The ARA notes 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.

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