According to the American Rental Association's updated forecast, the equipment rental industry in the U.S. is set to grow despite a predicted softening. Last quarter, growth was expected to be 4.7% in 2023 and 2.1% in 2024. However, the latest projections now show a growth of 7.6% in 2023, amounting to $60.4 billion in construction and general tool rental revenue. Revenue is expected to increase by 3.1% in 2024.
"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," says 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,” says Tom Doyle, ARA vice president of program development. “Inflation is still high, interest rates are still high and they may continue to rise, while issues remain with labor shortages and supply.”
Investment and employment in the construction industry are reaching record highs, and rental companies are showing their adaptability.
“I continue to marvel at the adaptability of our members. They have found ways to overcome these headwinds and provide solutions for their customers,” Doyle says.
Equipment rental revenue growth in Canada has surpassed last quarter's data, thanks to inflation and strong demand. Initially projected to be -0.3% for 2023, the forecast has now been revised to 2.9%, with an expected revenue of $4.6 billion. For 2024, the projected growth rate is 4.3%, totaling $4.8 billion in revenue. This growth is for both construction and general tool equipment rental revenue.
“Canada was able to avoid a technical recession, but the GDP remains weak and that contributes to the new projections,” Hazelton says. “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, says, “ARA’s quarterly member survey reveals that not only is consumer sentiment improving, rental operators echo the optimism.”
Last quarter, ARA members were asked about the current situation of equipment rental and 18 percent of respondents believed the situation was getting better. This quarter, 32 percent of respondents indicated a more positive outlook with 86 percent 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 percent of respondents believe their revenues will increase compared to quarter two in 2022.