ARA Quarterly Forecast Reveals Economic Optimism
Outlook calls for greater growth than previous quarter's projection.
The American Rental Association (ARA) indicates in its updated forecast that the United States equipment rental industry’s growth will soften but still grow. Last quarter, the year-over-year growth was expected to be 4.7 percent in 2023 and 2.1 percent in 2024. The most current projections indicate 7.6 percent growth in 2023 totaling $60.4 billion in construction and general tool rental revenue. As for 2024, a 3.1 percent revenue increase is now expected.
"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.”
However, investment in the construction industry and construction employment approaches a record high. Also evident is rental companies’ adaptiveness.
“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.
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 -0.3 percent and 4.7 percent for 2024. Now, Canadian equipment rental revenue growth (construction and general tool combined) is projected to be 2.9 percent in 2023 and 4.3 percent in 2024, totaling $4.6 billion and $4.8 billion respectively.
“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.”
Savely adds, “Interestingly enough, the last couple quarters we've seen synchronicity from the top down (S&P Global) and bottom up (quarterly member survey) data, including projections and sentiments,” Savely says. “They're both showing growth. Our members are benefitting from getting both the top-level economic picture and results of our internal surveys.”
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.
About ARA: (www.ARArental.org) The American Rental Association, Moline, Ill., is an international trade association for owners of equipment and event rental businesses and the manufacturers and suppliers of construction/industrial, general tool, and event rental equipment. ARA members, which include more than 11,000 rental businesses and more than 1,000 manufacturers and suppliers, are located in every U.S. state, every Canadian province, and more than 40 countries worldwide. Founded in 1955, ARA is the source for information, advocacy, education, networking, and marketplace opportunities for the equipment and event rental industry throughout the world.
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