- Q1 forecast: 7.9 increase
- Q2 forecast: 9.7% increase, though growth may slow in 2025 and again in 2026
- Revenue from general tool expected to see a 9.7% increase as well
According to the American Rental Association's (ARA) latest forecast, the projection for the equipment rental industry has increased since last quarter. The Q1 forecast originally projected a 7.9% increase, the most current projection indicates a 9.7% increase in 2024, totaling a $79.2 billion in construction and general tool rental revenue.
Conducted through the lens of the ARA's exclusive rental revenue model and survey results from members, "the forecast confirms the continuation of a growing rental industry," says Tom Doyle, ARA vice president program development.
However, Scott Hazelton, managing director at S&P Global seems pragmatic about the projections. He notes that the forecast is neither a serious bust or boom. “The outlook remains steady and inflation is falling. The growth rates tail off in the future years, with growth of 3.8% in 2025 and 3.1% in 2026.”
Congress suspended the debt ceiling through 2024. The Federal Reserve will not be cutting rates until December. Rate cuts being deferred to December does not affect 2024, but weakens 2025’s growth.
Jeff Vance, senior vice president of operations services, Sunstate Equipment Co., adds, “Our forecasts are in line with S&P’s as well. We did see a softer winter and spring than we typically see, with used equipment prices softening substantially as well but we are seeing single digit growth in 2024.”
Vance also says that supply chain issues have loosened, making it easier to get fleet and parts. In addition, he mentions new vendors have been introduced into the marketplace with new technology, especially in the electric and battery-operated space.
“We’re doing a lot of investigation into electrification,” he says. “The power grid is always a topic in our minds. But, more electrification is coming, so we must be prepared to service our customers in those ways.”
Canada
The updated forecast for total Canadian equipment rental revenue shows a 7.2% growth this year, totaling $5.79 billion. Broken down by segment, general tool and construction and industrial equipment (CIE) are both expected to see growth.
Canadian general tool revenue this year is projected to be 6.8%, $1.08 billion, up from last quarter’s projection of $954 million. Canadian CIE revenue is projected to be $4.71 billion.
Darryl Cooper, president, Cooper Equipment Rentals, says, “Our experience mirrors what ARA is reporting. Despite headwinds in the residential market, revenues are up, with western Canada stronger than eastern Canada.”
General Tool
General tool revenue is projected to increase 9.7% this year to $16.6 billion and investment is expected to expand in 2024 and beyond. This year, investment in general tool is projected to increase 7.3% with growth into 2025 at 7.9% and into 2026 at 6.4%.
“Our housing market is still being stubborn, so we see a 9.7% growth in 2024, an 8.8% increase in revenue growth in 2025,” says Hazelton. “Investment in general tool is higher than CIE, due to a faster replacement rate.”
The residential fixed investment is up modestly this year after two years of double-digit declines, this is important as it indicates housing starts, home improvements, and more.
An important development in this month’s forecast is the inclusion over recent history and in the forecast of faster immigration growth into the US. This raises the projection of the resident population by roughly 7 million by the end of this decade, raising our projections of both labor supply and aggregate demand. Over the next couple of years, S&P projects the added demand will roughly match the added supply, implying faster near-term growth and roughly the same (rising) unemployment path as in last month’s forecast.
For more in-depth economic data, visit www.ARArental.org/ara-rentalytics, to learn more about Rentalytics.
