The American Rental Association’s updated forecast calls for softening but continued growth for the equipment rental industry heading into 2024.
The current forecast puts growth at 11.8%, or $71.5 billion in revenue in 2023, up from ARA’s projections of 7.6% growth last quarter. At that time, ARA expected 3.1% growth for 2024. A 7.1% increase in revenue is now expected for next year.
ARA says the recent forecast includes both traditional and specialty as the new industry measure. Last quarter, the association corrected the forecast that underestimated nonresidential 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.”
ARA attributes the uptick in revenue to a stronger-than-expected economy, especially during the second half of 2023. Earlier in the year, the forecast predicted a recession that did not materialize.
“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.”
Inflation and resilient demand have also driven Canadian equipment rental revenue growth higher in 2023 compared to last quarter’s projections. Canadian CIE rental revenues are expected to reach 3.7%, or $4.5 billion, in 2024, 7.2% growth in 2025 and 5.7% growth in 2026.
