In its latest economic forecast, the American Rental Association (ARA) predicts slightly weaker sales growth for the Canadian market.
The updated forecast for total equipment rental revenue in Canada shows growth of 6.6 percent to $5.75 billion, up from 7.2 percent growth to $5.79 billion last quarter.
Broken down by segment, growth is expected in the general tools and construction and industrial equipment (CIE) sectors.
Construction and industrial equipment rentals will grow to $4.67 billion by 2024, while general tools sales are expected to grow 6.8 percent to $1.08 billion this year.
“What we’re seeing in our markets is quite a slowdown, but Stephenson’s is still growing. It’s a mixed picture. Residential activity is 60 to 65 per cent of these markets, and that activity is declining,” said Rob Wilson, chief operating officer of Stephenson’s Rental Services in Mississauga, Ontario.
Wilson is optimistic that the second half of 2025 will be good. The forecast for Canada’s combined rental revenue for 2025 is $6.14 billion, representing 6.7 percent year-over-year growth. Broken down by segment, that equates to $1.14 billion in general tool rental revenue and $5 billion in CIE equipment rental revenue.
“I wouldn’t call Canada’s economy robust, but CIE is one of the strongest investments around,” said Scott Hazelton, managing director at S&P Global. “We expect the economy as a whole to get stronger through 2027.”
Rent forecast for the USA
The ARA also predicts a slowdown in growth for the USA. The latest forecasts assume an increase in sales of 8.9 percent in 2024, which corresponds to a total sales of 78.7 billion dollars in the construction and general tool rental industry. Growth of 5.3 percent is expected in 2025.
This is down from last quarter’s forecast, which predicted a 9.7 percent increase to a total of $79.2 billion. Broken down by segment, CIE revenue is expected to reach $62.3 billion and general tool rental revenue is expected to be $16.4 billion.
“While the rental industry and its opportunities continue to grow, we are seeing slower growth,” said Tom Doyle, ARA’s vice president of program development. “ARA’s quarterly survey results confirm this slowdown.”
What is the reason for this forecast? S&P Global does not expect interest rates to be cut until December, despite the recent statement by Federal Reserve Chairman Jerome Powell. Powell wants inflation to remain under control before taking action. Hazelton also believes that rate cuts, if they come, will be slow.
“The forecast for construction and industrial has changed little since last quarter, maybe a few tenths of a basis point, but there have been more changes in the general instruments,” says Scott Hazelton, managing director of S&P Global. “The market is still doing well, but it is slowing. GDP growth next year is below trend at 1.6 percent, with the trend around 2.1 percent. The general outlook for rents is positive going forward, but there is uncertainty out there.”
