Growth in the United States equipment rental industry has a fairly positive outlook according to the latest forecast from the American Rental Association.
“The ARA Rentalytics quarterly forecast reinforces the strength of the rental industry," says Tom Doyle, ARA vice president, of program development. "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."
Last quarter, the year-over-year growth was expected to be 7.6% in 2023 and 3.1% in 2024. Current projections indicate a 7.9% increase in 2024, totaling $77.3 billion in construction and general tool rental revenue.
Looking more granularly at construction and industrial equipment growth in the U.S., ARA is projecting revenue of $60.9 billion in 2024, or a 7.5% increase. An additional 3% growth is projected by the association in 2025 - 2027, which is 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.”
The outlook is not as positive for general tool investment in the U.S. According to ARA, there is a muted growth of 6.8%, with manufacturing driving growth and housing continuing to be a 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 Q4, a slight improvement over Q3 which saw an even split between those an increase and decrease," says Mike Savely, ARA director, program development.
In the current forecasts, no state in the U.S. shows a decline in rental revenue growth in the next five years. The association says there are states with weaknesses, but there is still growth.
