Growth in rental equipment revenue in the United States will outpace Canada in 2024, according to the American Rental Association (ARA). However, Canada’s rental growth will more than triple the national GDP.
The ARA released its latest economic forecast during the ARA Show held in New Orleans in February. Since 2005, the ARA has partnered with S&P Global to estimate and forecast North American rental revenue.
According to the Business Development Bank of Canada (BDC), Canada’s GDP will grow by 0.9 per cent, while the ARA predicts rental revenue will grow by 3.1 per cent to US$974 million in 2024.
Looking stateside, rental revenue will grow by 7.9 per cent to $77.3 billion for construction and general tool rental.
“Canada is not quite as rosy a picture,” said Scott Hazelton, Director of S&P Global Market Intelligence.
“They had a much stronger economy coming into the current year, and they’ve got some pretty good growth rates. But there isn’t the same degree of federal service money in Canada as in the U.S.”
More rental news:
- All Choice Rentals acquires Select Equipment
- United Rentals adds solar battery generators to its fleet
- Nor-Val Rentals acquired by Sunbelt Rentals
Alongside a lower investment from government, Hazelton explained several other factors are hindering growth in Canada. Fewer new housing starts in Ontario, for example, will equal a downtrend in the rental market. As well, the United States is recording more construction to support manufacturing.
Canada’s energy sector is also usually a contributor to rental revenue. However, growth in energy is currently limited.
“Canada’s growth typically comes out of the oil sands or offshore on the East Coast,” Hazelton said. “There’s not a lot of new activity going on with energy in Canada.”
The forecast also predicts that interest rates in the United States will decline before Canada.
“They probably won’t start cutting rates until maybe a quarter after we do, which gives you a temporary exchange rate issue as well,” Hazelton said.
“So, thinking about (Canada’s) growth picture, it’s a little bit flatter than you might expect for a recovering economy.”
In the United States, the ARA predicts its GDP will grow by about 1.5 per cent. Rental revenue growth will hit 7.9 per cent, thanks to government spending initiatives, the Infrastructure Investment and Jobs Act, supply chain improvements and the calming of inflation and interest rates.
“There’s a lot of good tailwinds that we’re seeing to increase this rental revenue up to this level of 7.9 per cent,” said Tom Doyle, Vice President of Association Program Development at the ARA.
Looking ahead, revenue growth in the United States will continue with estimates of 4.3 per cent in 2025, 3.9 percent in 2026 and 3.8 per cent in 2027.
Throughout the year, fleet growth is expected to soften compared to recent years. Aerial access equipment will grow by 9 per cent, concrete equipment 7 per cent, earthmoving equipment 9 per cent and all other rental equipment by 8 per cent. In 2023, all four categories recorded growth rates between 16 and 23 per cent.
The ARA has also adjusted its forecast to now include data from specialty rental equipment in the construction industry, such as portable toilets and ground protection equipment.
