The American Rental Association (ARA), headquartered in Moline, has released an updated forecast for the construction and industrial equipment rental industry.
In the quarterly update, ARA presented significant changes in the economic forecast, particularly increased rental revenues for construction and industrial equipment (CIE).
The ARA is an international trade association for owners of equipment and event rental businesses as well as the manufacturers and suppliers of construction/industrial, general tool, and event rental equipment. ARA members, which include more than 12,000 rental businesses and more than 1,000 manufacturers and suppliers, are located in every U.S. state, every Canadian province, and more than 40 countries worldwide.
In the previous forecast, the association said CIE rental revenue was expected to reach $45.5 billion in 2023 and $46.7 billion in 2024. With new considerations, the CIE rental revenue is expected to total $56 billion this year and $59 billion in 2024.
According to ARA, there are two factors underpinning these changes. The first is the data on non-residential construction spending used in the model and the second is the increasing importance of “specialty rental” to overall rental revenues.
Recent analysis by economists at the Federal Reserve Board has suggested that data for non-residential construction spending produced by the U.S. Census Bureau has underestimated non-residential construction spending by at least 20% since the second quarter of 2021, ARA said in its forecast news release.
“The Fed economists’ analysis is both well-reasoned and analytically sound and we believe that this new information needs to be included in our revised forecast,” said John McClelland, ARA vice president for government affairs and chief economist.
“The second change in our forecast is the inclusion of information about specialty rentals which has been a growing trend. Recent work by our partners at S&P Global has constructed a ten-year time series of specialty rental from multiple data sources. Incorporating this new information into our model now gives specialty rentals a larger share among the variables that forecast CIE revenues.”
With current CIE forecasts including both traditional and specialty rental as the new industry measure, Canadian CIE rental revenues are expected to reach $4.4 billion in 2023 as opposed to previous forecasts totaling $3.7 billion. In 2024, Canadian CIE rental revenue is predicted to total $4.4 billion – an increase from the previous $3.8 billion forecast.
Canadian general tool equipment rental revenue is down slightly from the last forecast at $991 million. However, stronger growth is expected in 2024 and beyond as the forecast indicated 2024 revenue at $1 billion.
In the United States general tool market, rental revenue growth will slow through 2023, totaling $14.9 billion this year. This is driven by weakness in residential construction markets. Growth in 2024 is predicted to slow as well, with revenues equaling $15.7 billion in 2024.
