In its latest forecast, the American Rental Association states that the growth forecast for the U.S. equipment rental industry is slowing in 2024. Most current forecasts assume revenue growth of 8.9 percent in 2024, representing total revenue of $78.7 billion in construction and general tool rental, and growth of 5.3 percent in 2025.
This is down from last quarter’s forecast, which predicted a 9.7 percent increase to a total of $79.2 billion. Broken down by segment, construction and industrial equipment (CIE) rental revenue is estimated at $62.3 billion, and general tool rental revenue is estimated to total $16.4 billion.
“While the rental industry and its opportunities continue to grow, we are seeing slower growth,” said Tom Doyle, ARA’s vice president of program development. “The results of the ARA quarterly survey confirm this slowdown.”
“The forecast for the construction and industrial business has changed little since last quarter, perhaps by a few tenths of a basis point, but there have been more changes in the overall forecasts,” said Scott Hazelnut, Administration Director at S&P Global. “The market is still doing well, but it is slowing down. GDP growth next year is below trend at 1.6 percent, the trend is around 2.1 percent. The general outlook for rents is positive for the future, but there is uncertainty out there.”
Kurt Barney, president of Vandalia Rental, Vandalia, Ohio, adds, “We’re also seeing slowing growth by and large. We’re seeing price elasticity. It’s no longer a case of ‘Got it?’ We’re doing business again like we did in 2019, when we really had to communicate the value of working with us. We’re balancing pricing pressure, supply chain and fleet mix in a slowing environment, especially in the earthmoving space. When rates start to come down, I think some projects will be taken out of play. The quarter and half points have a huge impact on those projects. The rental model and supply has never been stronger. It’s a good position to be in.”
What does Canada look like?
The updated forecast for total equipment rental revenue in Canada shows growth of 6.6 percent to a total of $5.75 billion. Last quarter, growth of 7.2 percent to a total of $5.79 billion was forecast. Broken down by segment, growth is expected in the general tools and construction and industrial equipment (CIE) sectors.
According to ARA, sales in the Canadian general tools market are expected to grow 6.8 percent, or $1.08 billion, this year, and Canadian CIE sales in 2024 are expected to reach $4.67 billion.
Rob Wilson, chief operating officer of Stephenson’s Rental Services in Mississauga, Ontario, says, “We’re seeing a bit of a slowdown in our markets, but Stephenson’s is still growing. It’s a mixed bag. Sixty to 65 percent of those markets are residential, and that activity is declining.”
Wilson is optimistic that the second half of 2025 will be very strong.
Canada’s combined rental revenue forecast for 2025 is $6.14 billion, representing year-over-year growth of 6.7 percent. Broken down by segment, this equates to $1.14 billion in general tool rental revenue and $5 billion in CIE equipment rental revenue.
“I wouldn’t call Canada’s economy robust, but CIE is one of the strongest investments anywhere,” said Hazelton. “We expect the economy as a whole to be stronger through 2027.”
What is the reason for this forecast? S&P Global does not expect interest rates to be cut until December, despite the recent statement by Federal Reserve Chairman Jerome Powell. Powell wants inflation to remain under control before taking action. Hazelton also believes that rate cuts, if they come, will be slow.We (S&P Global) also expect GDP growth to decline from 2.4 percent this year to 1.6 percent next year,” says Hazelton.
For more detailed economically Data, visit www.ARArental.org/ara-rentalytics.
