ARA Forecast Expects Continued Growth for U.S. Construction Industry

The American Rental Association’s (ARA) latest quarterly economic forecast has good news for the U.S. construction industry, representatives say.

In the latest report, the association projects that the combined American construction and industrial equipment (CIE) industry will increase by 3.4% in 2026, to a total of $83.5 billion. While this is essentially unchanged from the last quarter’s projection for the rest of the year, the long-term outlook is where the industry is seeing the rosiest numbers.

Beyond 2026, the report says the U.S. construction, industrial, and general tool rental industry’s revenue is looking better than previous projections. The association expects revenue to grow at a pace of about 4.4% in 2027, followed by a slightly quicker pace of 5.1% in 2028, both of those numbers sitting slightly higher than that of previous quarters.

“The latest ARA Rentalytics updates confirm the equipment rental structural changes toward rentals,” says Tom Doyle, VP of program development for ARA. “The rental revenue increase indicates the preference for renting over ownership. The reasons are many for the growth, including the access to the equipment versus the asset ownership and the economics of renting.

“While rental revenue has increased, the results are mixed. If you have any of the large infrastructure projects or data center buildouts, you’re in a stronger market with generally better results.”

The report also says Canada’s CIE equivalent industry is project to grow at 5.4% in 2027, as well as 5.5% in 2028. This growth acceleration can be attributed to the Great White North’s continued spending in both infrastructure and domestic oil field development.

Meeting potential headwinds

Despite all the good news, there are a few potential bumps in the road coming for the industry, the report says. Specifically, the ongoing wars in the Middle East could have an outsized impact on the American construction and industrial industry, according to Scott Hazelton, managing director of S&P Global, the compiler of the ARA’s analytical reports.

“One of the risks to the forecast is what is happening in the Middle East,” Hazelton says. “The war [with Iran] is not the problem for the U.S; the problem is the transmission of inflation through energy rates — both because of lower supply and because of the risk of transporting through the Strait of Hormuz.”

Hazelton adds that the risk of inflation could also loom large, should things continue to break badly in the Middle East. This is potentially a large concern, but Hazelton says the worst outcomes as “right now, lower-risk outcomes,” and that a major change in the Middle East that leads to further heightened prices is “unlikely.”

“If inflation stays elevated through this year, that limits what the federal reserve can do with interest rates,” Hazelton says, “and in fact we’ve seen housing starts fail to move and most recently the numbers we saw for construction spend and home improvement spending was down too.”