The American Rental Association (ARA) indicates in its updated forecast that the U.S. equipment rental industry’s growth will soften but still grow in the second quarter.
ARA, headquartered in Moline, is an international trade association for owners of equipment and event rental businesses and the manufacturers and suppliers of construction/industrial, general tool and event rental equipment.
ARA reported in a news release that last quarter, the year-over-year growth was expected to be 4.7% in 2023 and 2.1% in 2024. The most current projections indicate 7.6% growth in 2023 totaling $60.4 billion in construction and general tool rental revenue. As for 2024, a 3.1% revenue increase is now expected.
“While the growth has softened, we’re looking at a more optimistic outlook than we were a quarter ago. The recession fears we had have subsided,” Scott Hazelton, managing director at S&P Global.
“After talking with many manufacturers and operators at CONEXPO-CON/AGG and in the weeks after, it’s clear the headwinds are still there,” Tom Doyle, ARA vice president of program development, said in a forecast news release. “Inflation is still high, interest rates are still high and they may continue to rise, while issues remain with labor shortages and supply.”
However, investment in the construction industry and construction employment approaches a record high. Also evident is rental companies’ adaptiveness, according to the association.
“I continue to marvel at the adaptability of our members. They have found ways to overcome these headwinds and provide solutions for their customers,” Mr. Doyle added.
In Canada, equipment rental revenue growth is higher in 2023 compared to last quarter’s data due to inflation and resilient demand. At the end of 2022, the Canadian equipment rental revenue forecast for 2023 was -0.3% and 4.7% for 2024. Now, Canadian equipment rental revenue growth (construction and general tool combined) is projected to be 2.9% in 2023 and 4.3% in 2024, totaling $4.6 billion and $4.8 billion, respectively.
“Canada was able to avoid a technical recession, but the GDP remains weak and that contributes to the new projections,” said Mr. Hazelton. “The big issue is the pull back on the residential market as home values have weakened and there is high inflation. However, The Bank of Canada is predicted to press pause on interest rate hikes, so consumer sentiment is improving.”
Mike Savely, ARA director of program development, said: “ARA’s quarterly member survey reveals that not only is consumer sentiment improving, rental operators echo the optimism.”
Mr. Savely adds: “Interestingly enough, the last couple quarters we’ve seen synchronicity from the top down and bottom up (quarterly member survey) data, including projections and sentiments.”
In the last quarter of 2022, ARA members were asked about the current situation of equipment rental and 18% of respondents believed the situation was getting better. For first quarter 2023, the survey showed 32% indicated a more positive outlook with 86% of respondents reflecting a generally positive sentiment.
Looking to the second quarter, ARA members were asked if they expect a revenue change compared to the same quarter last year. Results show that 76% of respondents believe their revenues will increase compared to the same period in 2022.
Founded in 1955, today ARA’s membership has grown to more than 11,000 rental businesses and more than 1,000 manufacturers and suppliers. Its members are located in every U.S. state and Canadian province as well as in more than 40 countries worldwide.
