- Q1 forecast: 7.9 increase
- Q2 forecast: 9.7% increase
- Q3 forecast: 8.9% increase
The American Rental Association's (ARA) latest growth projection for 2024 indicated some softening of the rental industry. The Q3 projection is now an 8.9% revenue increase (a decrease from the Q2 forecast), bringing the construction and general tool rental revenue to $78.7 billion and a 5.3% growth in 2025. The projections rental revenue for construction and industrial is now $62.3 billion and $16.4 billion for general tool. Numbers are for the U.S. and Canada.
"The rental model and proposition has never been stronger. It’s a good place to be.”
— Kurt Barney, president of Vandaila Rental
In the August 2 release, Tom Doyle, ARA vice president, program development, reminds us all that even through the softer growth, "opportunities continue to expand." The release also includes comments from Scott Hazelton, managing director at S&P Global (the international forecasting firm that compiles data and analysis for the ARA forecast), and the president of Vandaila Rental, Kurt Barney.
Hazelton's comments seem to place the onus of the decreased projection on the general tool segment, noting that construction and industrial changed a few tenths of basis points. “The market is still doing well but slowing," he says. "Next year’s GDP growth is lower than trend at 1.6% growth, the trend is around 2.1%. The overall view of rental is positive moving forward, but there is uncertainty out there.”
Barney has almost set aside the supply concerns and conducting business similar to what they had pre-pandemic. "It’s no longer, ‘Do you have it?’ We’re back to doing business like 2019 when we have to really communicate the value proposition of working with us. We’re balancing rate pressures, supply chain and mix of the fleet in a softening environment, especially on the earthmoving side. As interest rates begin to decline, I think it will take some of the projects off the sidelines. The quarter and half points have a huge impact on those projects. The rental model and proposition has never been stronger. It’s a good place to be.”
As reported in the release: the S&P Global believes that interest rates will not come down until December, despite the testimony this week by Jerome Powell, chair of the U.S. Federal Reserve. Powell wants to see inflation staying under control before any moves are made. Hazelton also believes when the cuts come, they will come slowly.
“We [S&P Global] also see a downshift in GDP from 2.4% growth this year to 1.6% growth next year,” Hazelton said.
The announcement included a forecast for Canada as well.
Canada
The ARA's Canadian equipment rental revenue forecast showed a 6.6% growth for a total of $5.75 billion (a decrease from 7.2% growth in Q2). Both general tool and construction industrial equipment are expected to see growth: 6.8% ($1.08 billion) and $4.67 billion respectively.
Combined, the 2025 projection for Canada is $6.14 billion - a 6.7% year-over-year growth. While Hazelton wouldn't characterize the country's economy as robust, he did add that construction industrial equipment was one of the strongest investments. Adding an optimistic, “We do expect the economy to get stronger as a whole by 2027.”
