s the North American equipment rental industry softening or stabilizing?

The Equipment Leasing Association (ARA) released its latest industry forecasts this month. What changes does the Us-Based trade group predict for the market this year and next? (Reporting by International Construction)

The answer is that the outlook for both the short and long term is mixed.

Us market revenue forecast lowered, but future interest rate cuts bring optimism In the US, ARA forecasts that the growth of the equipment rental industry will slow in 2024. Revenue in 2024 is expected to grow 8.9 percent to $78.7 billion, mainly from construction and tool leasing, the association said. That's down from the 9.7 percent growth forecast for the previous quarter, when total revenue was expected to be $79.2 billion. Specifically, construction and industrial leasing revenue (CIE) is expected to be $62.3 billion, and general utility leasing revenue is expected to be $16.4 billion. "We're also seeing a slowdown in growth, and pricing flexibility is becoming more pronounced," said Kurt Barney, president of Vandalia Rental, Ohio. He added: "It's no longer, 'Do you have it? But rather a return to a business model similar to 2019, we need to communicate more clearly the value proposition of working with us." Barney noted that with the Federal Reserve expected to announce its first interest rate cut since March 2020 in September, U.S. markets could get some relief. On August 23, Federal Reserve Chairman Jerome Powell all but confirmed that the Fed plans to cut interest rates at next month's meeting.

"We are balancing interest rate pressures, supply chain issues and equipment portfolio in a softer market context, especially in earthmoving equipment." "As interest rates start to fall, some projects that were put on hold may restart," Barney explains. Still, the U.S. market has repeatedly promised rate cuts over the years, and Scott Hazelton, managing director of data analytics at S&P Global, recommended a cautious approach for the rest of 2024. In mid-August, he said, "S&P Global doesn't see a rate cut until December." Before Powell's August 23 speech, he had said: "Powell wants to see inflation under control before he moves."

Rental industry growth slows in Canada, but companies are still growing in Canada, and while the percentage of growth is down slightly, revenue is expected to exceed expectations this year. "The latest forecast shows total equipment rental revenue in Canada rising 6.6 per cent to $5.75 billion, down from the previous quarter's forecast of a 7.2 per cent increase of $5.79 billion," ARA said. Canada general Tools lease revenue is expected to grow 6.8 per cent this year to $1.08 billion, while CIE Canada lease revenue is expected to be $4.67 billion in 2024. Leasing revenue in Canada is expected to reach $6.14 billion in 2025, an increase of 6.7%. Of this, General Tools lease revenue was $1.14 billion and CIE lease revenue was $5 billion. Hazelton said: "While the Canadian economy is not robust, CIE remains one of the most attractive areas for investment. We expect the overall economy to strengthen by 2027."

Hazelton added: "The forecast for construction and industrial leasing has changed little since last quarter, perhaps with only sporadic basis point changes, but the change has been greater in the general purpose tools segment. The market is still doing well, but it's slowing. GDP growth next year is below trend, projected at 1.6 percent, compared with the normal trend of around 2.1 percent." Despite the uncertainty, Hazelton remains optimistic about the future of the rental market, but he also stressed that "there are still uncertainties ahead." For the U.S. market, even a small rate cut could have a big impact on the leasing sector, Barney said. "Even a cut of a quarter or half a percentage point has a big impact on projects," he said, adding that easier borrowing conditions would benefit growing companies. "The leasing model and the value proposition have never been stronger." "That's a good direction to go."

Is the North American equipment rental industry softening or stabilizing?

The Equipment Leasing Association (ARA) released its latest industry forecasts this month. What changes does the Us-Based trade group predict for the market this year and next? (Reporting by International Construction)

The answer is that the outlook for both the short and long term is mixed.

Us market revenue forecast lowered, but future interest rate cuts bring optimism In the US, ARA forecasts that the growth of the equipment rental industry will slow in 2024. Revenue in 2024 is expected to grow 8.9 percent to $78.7 billion, mainly from construction and tool leasing, the association said. That's down from the 9.7 percent growth forecast for the previous quarter, when total revenue was expected to be $79.2 billion. Specifically, construction and industrial leasing revenue (CIE) is expected to be $62.3 billion, and general utility leasing revenue is expected to be $16.4 billion. "We're also seeing a slowdown in growth, and pricing flexibility is becoming more pronounced," said Kurt Barney, president of Vandalia Rental, Ohio. He added: "It's no longer, 'Do you have it? But rather a return to a business model similar to 2019, we need to communicate more clearly the value proposition of working with us." Barney noted that with the Federal Reserve expected to announce its first interest rate cut since March 2020 in September, U.S. markets could get some relief. On August 23, Federal Reserve Chairman Jerome Powell all but confirmed that the Fed plans to cut interest rates at next month's meeting.

"We are balancing interest rate pressures, supply chain issues and equipment portfolio in a softer market context, especially in earthmoving equipment." "As interest rates start to fall, some projects that were put on hold may restart," Barney explains. Still, the U.S. market has repeatedly promised rate cuts over the years, and Scott Hazelton, managing director of data analytics at S&P Global, recommended a cautious approach for the rest of 2024. In mid-August, he said, "S&P Global doesn't see a rate cut until December." Before Powell's August 23 speech, he had said: "Powell wants to see inflation under control before he moves."

Rental industry growth slows in Canada, but companies are still growing in Canada, and while the percentage of growth is down slightly, revenue is expected to exceed expectations this year. "The latest forecast shows total equipment rental revenue in Canada rising 6.6 per cent to $5.75 billion, down from the previous quarter's forecast of a 7.2 per cent increase of $5.79 billion," ARA said. Canada general Tools lease revenue is expected to grow 6.8 per cent this year to $1.08 billion, while CIE Canada lease revenue is expected to be $4.67 billion in 2024. Leasing revenue in Canada is expected to reach $6.14 billion in 2025, an increase of 6.7%. Of this, General Tools lease revenue was $1.14 billion and CIE lease revenue was $5 billion. Hazelton said: "While the Canadian economy is not robust, CIE remains one of the most attractive areas for investment. We expect the overall economy to strengthen by 2027."

Hazelton added: "The forecast for construction and industrial leasing has changed little since last quarter, perhaps with only sporadic basis point changes, but the change has been greater in the general purpose tools segment. The market is still doing well, but it's slowing. GDP growth next year is below trend, projected at 1.6 percent, compared with the normal trend of around 2.1 percent." Despite the uncertainty, Hazelton remains optimistic about the future of the rental market, but he also stressed that "there are still uncertainties ahead." For the U.S. market, even a small rate cut could have a big impact on the leasing sector, Barney said. "Even a cut of a quarter or half a percentage point has a big impact on projects," he said, adding that easier borrowing conditions would benefit growing companies. "The leasing model and the value proposition have never been stronger." "That's a good direction to go."