In its updated forecast, the American Rental Association (ARA) indicates that the United States equipment rental industry's growth projection has increased since last quarter. The most current projections indicate a 9.7 percent 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 percent increase totalling $77.3 billion.
"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," states Tom Doyle, ARA vice president of program development.
"There has been no serious bust, thus, there is no serious boom," says 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 percent in 2025 and 3.1 percent in 2026."
"Our forecasts are in line with S&P's as well. We did see a softer winter and spring than we typically see, with used equipment prices softening substantially as well but we are seeing single-digit growth in 2024," says Jeff Vance, senior vice president of operations services at Sunstate Equipment Co.
Vance also says that supply chain issues have loosened, making it easier to get fleet and parts. In addition, he mentions 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," Vance says. "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 for total Canadian equipment rental revenue shows a 7.2 percent growth this year, totalling $5.79 billion. Broken down by segment, general tools, and construction and industrial equipment (CIE) are both expected to see growth.
Canadian general tool revenue this year is projected to be 6.8 percent, $1.08 billion, up from last quarter's projection of $954 million. Canadian CIE revenue is projected to be $4.71 billion.
"Our experience mirrors what ARA is reporting," says Darryl Cooper, president of Cooper Equipment Rentals. "Despite headwinds in the residential market, revenues are up, with western Canada stronger than eastern Canada."
General tool revenue is projected to increase 9.7 percent this year to $16.6 billion and investment is expected to expand in 2024 and beyond. This year, investment in general tools is projected to increase 7.3 percent with growth into 2025 at 7.9 percent and into 2026 at 6.4 percent.
"Our housing market is still being stubborn, so we see a 9.7 percent growth in 2024, an 8.8 percent increase in revenue growth in 2025," says Hazelton. "Investment in general tool is higher than CIE, due to a faster replacement rate."
What's driving this forecast? Congress suspended the debt ceiling through 2024. The Federal Reserve will not be cutting rates until December. Rate cuts being deferred to December does not affect 2024 but weakens 2025's growth.
The residential fixed investment is up modestly this year after two years of double-digit declines, this is important as it indicates housing starts, home improvements, and more.
An important development in this month's forecast is the inclusion of recent history in the forecast 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, raising the ARA's projections of both labour 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.
