The American Rental Association estimated the construction and industrial equipment (CIE) rental industry will reach $56 billion this year and total $59 billion in 2024. The new estimate updates the association’s previous forecast of $45.5 billion this year and $46.7 billion next year.
The ARA said two factors are responsible for this revised view. The first is the data on non-residential construction spending used in the model and the second is the increasing importance of ‘specialty rental’ to overall rental revenues.
Economists at the Federal Reserve Board suggested that data for non-residential construction spending produced by the U.S. Census Bureau has underestimated non-residential construction spending by at least 20 percent since the second quarter of 2021.
“The Fed economists’ analysis is both well-reasoned and analytically sound and we believe that this new information needs to be included in our revised forecast,” said John McClelland Ph.D., ARA vice president for government affairs and chief economist. “The second change in our forecast is the inclusion of information about specialty rentals which has been a growing trend. Recent work by our partners at S&P Global has constructed a 10-year time series of specialty rental from multiple data sources. Incorporating this new information into our model now gives specialty rentals a larger share among the variables that forecast CIE revenues.”
Canadian revenues rise as well
With current CIE forecasts including both traditional and specialty rental as the new industry measure, Canadian CIE rental revenues are expected to reach $4.4 billion in 2023 as opposed to previous forecasts totaling $3.7 billion. In 2024, Canadian CIE rental revenue is predicted to total $4.4 billion, an increase from the previous forecast of $3.8 billion.
Canadian general tool equipment rental revenue is down slightly from the last forecast at $991 million. However, stronger growth is expected in 2024 and beyond as the forecast indicated 2024 revenue at $1 billion.
In the United States general tool market, rental revenue growth will slow through 2023, totaling $14.9 billion this year. This is driven by weakness in residential construction markets. Growth in 2024 is predicted to slow as well, with revenues equaling $15.7 billion in 2024.