In its latest economic forecast, the American Rental Association (ARA) is predicting slightly softened revenue growth for the Canadian market.
The updated forecast for total Canadian equipment rental revenue shows a 6.6 per cent growth totaling $5.75 billion, compared to last quarter’s projection of 7.2 per cent growth, totaling $5.79 billion.
Broken down by segment, general tool and construction and industrial equipment (CIE) are both expected to see growth.
Construction and industrial equipment rental will grow to $4.67 billion in 2024, while general tool revenue this year is projected to be 6.8 per cent reaching $1.08 billion.
“What we’re seeing across our markets is pretty slow, but Stephenson’s is still growing. It’s a mixed bag. Residential activity represents 60 per cent to 65 per cent of those markets and that activity is down,” said Rob Wilson, Chief Operating Officer for Stephenson’s Rental Services in Mississauga, Ontario.
Wilson is optimistic that the latter half of 2025 will be strong. The 2025 projection for Canada’s combined rental revenue is $6.14 billion, a 6.7 per cent year-over-year growth. Broken down by segment that equals $1.14 billion in general tool rental revenue and $5 billion in CIE rental revenue.
“I wouldn’t characterize Canada’s economy as robust, but CIE is one of the strongest investments in particular,” said Scott Hazelton, Managing Director at S&P Global. “We do expect the economy to get stronger as a whole by 2027.”
Rental forecast for the United States
Looking to the United States, the ARA also projects growth softening. The most current projections indicate an 8.9 per cent revenue increase in 2024 totalling $78.7 billion in construction and general tool rental revenue and a 5.3 per cent growth in 2025.
This is a decrease from last quarter’s projection of a 9.7 pe cent increase totaling $79.2 billion. Broken down by segment, CIE is projected to reach $62.3 billion and general tool rental revenue is expected to total $16.4 billion.
“While the rental industry and opportunities continue to expand, we are experiencing softer growth,” said Tom Doyle, ARA Vice President of Program Development. “The ARA quarterly survey results confirm this softening.”
What’s driving this forecast? S&P Global believes that interest rates will not come down until December, despite the chair of the federal reserve, Jerome Powell’s, most recent testimony. Powell wants to see inflation staying under control before any moves are made. Hazelton also believes when the cuts come, they will come slowly.
“The forecast for construction and industrial has not changed much since last quarter, perhaps a few tenths of basis points, but there has been more change to general tool,” says Scott Hazelton, managing director at S&P Global. “The market is still doing well but slowing. Next year’s GDP growth is lower than trend at 1.6 per cent growth, the trend is around 2.1 per cent. The overall view of rental is positive moving forward, but there is uncertainty out there.”
