ARA raises equipment rental forecast

The American Rental Association (ARA) has raised its growth projections for the U.S. equipment rental industry.

The most current projections indicate 7.6% growth in 2023 totaling $60.4 billion in construction and general tool rental revenue. A 3.1% revenue increase is now expected for 2024.

Last quarter, year-over- year growth was expected to be 4.7% in 2023 and 2.1% in 2024.

“While the growth has softened, we’re looking at a more optimistic outlook than we were a quarter ago,” said Scott Hazelton, managing director at S&P Global. “The recession fears we had have subsided.”

“After talking with many manufacturers and operators at CONEXPO-CON/AGG and in the weeks after, it’s clear the headwinds are still there,” said 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.”

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 a decline of 0.3% and a 4.7% increase for 2024. 

The updated model projects 2.9% growth in Canada this year and a 4.3% increase in 2024.

“Canada was able to avoid a technical recession, but the GDP remains weak and that contributes to the new projections,” Hazelton s. “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.”

Last quarter, ARA members were asked about the current situation of equipment rental and 18% of respondents believed the situation was getting better. This quarter, 32% of respondents indicated a more positive outlook with 86% of respondents reflecting a generally positive sentiment, the ARA said.

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 quarter two in 2022.

“ARA’s quarterly member survey reveals that not only is consumer sentiment improving, rental operators echo the optimism,” said Mike Savely, ARA director of program development.