An updated report from the American Rental Association (ARA) indicates that the U.S. equipment rental industry’s growth projection has increased since last quarter.
The latest projections indicate a 9.7% increase in 2024 totaling $79.2 billion in construction and general tool rental revenue. This is an increase from last quarter’s projection of a 7.9% increase, totaling $77.3 billion.
ARA, based 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 party/event rental equipment.
“The 2024 ARA forecast through the lens of our exclusive rental revenue model, and survey results gathered from members, confirms the continuation of a growing rental industry,” Tom Doyle, ARA vice president program development, said in a news release.
“There has been no serious bust, thus, there is no serious boom,” added Scott Hazelton, managing director at S&P Global. “The outlook remains steady and inflation is falling. The growth rates tail off in the future years, with growth of 3.8% in 2025 and 3.1% in 2026.”
Jeff Vance, senior vice president of operations services, Sunstate Equipment Co., said that supply chain issues have loosened, making it easier to get fleet and parts.
Sunstate, a supplier of commercial and industrial equipment, is based in Phoenix, Arizona.
In addition, he said new vendors have been introduced into the marketplace with new technology, especially in the electric and battery-operated space.
“We’re doing a lot of investigation into electrification,” he added. “The power grid is always a topic in our minds. But, more electrification is coming, so we must be prepared to service our customers in those ways.”
The updated forecast also shows a 7.2% growth for total Canadian equipment rental revenue this year, totaling $5.79 billion. Broken down by segment, general tool and construction and industrial equipment (CIE) are both expected to see growth.
Canadian general tool revenue this year is projected to be 6.8%, $1.08 billion, up from last quarter’s projection of $954 million. Canadian CIE revenue is projected to be $4.71 billion.
Darryl Cooper, president of Cooper Equipment Rentals, said: “Our experience mirrors what ARA is reporting. Despite headwinds in the residential market, revenues are up, with western Canada stronger than eastern Canada.”
Cooper is based out of Mississauga, Ontario, Canada.
General tool revenue is projected to increase 9.7% this year to $16.6 billion and investment is expected to expand in 2024 and beyond. This year, investment in general tool is projected to increase 7.3% with growth into 2025 at 7.9% and into 2026 at 6.4%.
“Our housing market is still being stubborn, so we see a 9.7% growth in 2024, an 8.8% increase in revenue growth in 2025,” said S&P’s Mr. Hazelton. “Investment in general tool is higher than CIE, due to a faster replacement rate.”
The residential fixed investment is up modestly this year after two years of double-digit declines, ARA said, adding this is important as it indicates housing starts, home improvements.
An important development in this month’s forecast is the inclusion over recent history of faster immigration growth into the U.S. This raises the projection of the resident population by roughly 7 million by the end of this decade and raises projections of both labor supply and aggregate demand.
Over the next couple of years, S&P projects the added demand will roughly match the added supply, implying faster near-term growth and roughly the same rising unemployment path as in last month’s forecast.
For more in-depth economic data, visit here to learn more about ARA’s Rentalytics.
