NEW ORLEANS (Feb. 19, 2024) — In its updated forecast released at The ARA Show, the American Rental Association (ARA) indicates that the U.S. equipment rental industry’s growth has a fairly positive outlook. Last quarter, the year-over-year growth was expected to be 7.6% in 2023 and 3.1% in 2024. The most current projections indicate a 7.9% increase in 2024 totaling $77.3 billion in construction and general tool rental revenue.
“The ARA Rentalytics quarterly forecast reinforces the strength of the rental industry,” said Tom Doyle, ARA vice president, 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.”
Looking more granularly at construction and industrial equipment (CIE) growth in the U.S, $60.9 billion is the projected revenue in 2024, which is 7.5% growth. In the coming years, 2025, 2026 and 2027, 3% growth is projected. 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,” said 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 current forecast for total Canadian equipment rental revenue shows a 3.1% growth to $974 million in 2024. 2024 growth is stronger in Canada than 2023 growth due to inflation and resilient demand. In addition, Canada’s housing market and non-residential structure construction are both improving.
While CIE investment will decline from previous years, a 7.2% increase is forecasted. The stark contrast from previous years is attributed 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," said Mike Savely, ARA director, program development.
In current forecasts, no state in the U.S. has a decline in rental revenue growth in the next five years. There are states with weaknesses, but there is still growth.
The American Rental Association, headquartered in Moline, Illinois, is an international trade association for owners of equipment and event rental businesses and the manufacturers and suppliers of construction/industrial, general tool and party/event rental equipment. ARA members, which include more than 11,500 rental businesses and more than 1,000 manufacturers and suppliers, are located in every U.S. state and more than 44 countries worldwide. F
