ARA’s quarterly forecast shows increased optimism, slower growth and resilient markets

In its updated forecast, the American Rental Association (ARA) indicates that the United States equipment rental industry’s growth will soften but still grow. The association said last quarter, it expected the year-over-year growth to be 7.6 percent in 2023 and 3.1 percent in 2024. The most current projections indicate 11.8 percent growth in 2023 totaling $71.5 billion in construction and general tool rental revenue. As for 2024, the association now expects a 7.1 percent revenue increase.

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

“We are more bullish this quarter than last quarter,” said 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 tools.”

Earlier in the year, the forecast predicted a recession that did not materialize. While the first two quarters of the year proved slow, ARA said third-quarter revenues are very strong and the quarter four projections trend that way, too.

“The biggest change is in the general tool revenue projection,” Hazelton said. “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 upward 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 projects slower growth with strong levels of activity in 2024. This includes a 3.7 percent revenue increase, making it a $4.5 billion industry with stronger growth anticipated in outbound years, a 7.2 percent revenue increase in 2025 and 5.7 percent in 2026.

ARA’s quarterly member survey showed conflicting results among members as half of the respondents said they expect to see a revenue increase in the fourth quarter and half expect a revenue decrease.