Mixed Signals from Manufacturing Cast a Shadow Over Equipment Rental Demand
As we move through Q2 2025, the commercial equipment rental and leasing sector is facing crosswinds from a slowing manufacturing sector and broader economic uncertainty. According to the Institute for Supply Management’s Spring 2025 Forecast, US manufacturing revenue growth is expected to slow to just 0.1%, a steep drop from prior projections. With capital expenditures projected to decline by 1.3% this year, equipment rental demand tied to manufacturing expansion may soften in the near term.
However, the long-term outlook remains strong, with industry sales forecasted to grow at a 4.53% compound annual rate from 2025 through 2029, outpacing overall economic growth. This is due in part to continued infrastructure investment, demand from energy and construction sectors, and the flexibility that rental offers in uncertain environments.
The latest ISM data shows declining optimism among manufacturers, a key customer base for commercial rental services.
Only 34% of surveyed manufacturers expect revenue growth in 2025, while 22% expect declines.
Trade policy volatility and inflation continue to delay major capital investments.
Labor and Wages Continue Upward Trend
Employment in commercial and industrial equipment rental rose 2.8% year-over-year in April and has climbed 41.3% over the past decade, significantly outpacing overall private sector growth.
Average wages in the sector rose 5.2% to $33.92/hour, reflecting strong labor demand and inflationary pressure.
Long-Term Growth Still in Focus
Despite current headwinds, the sector’s fundamentals remain healthy. Over the past three years, employment in the rental space has grown 18.9%, and wage trends remain aligned with the broader economy. Many firms are continuing to invest in digital booking platforms, fleet optimization tools, and automated logistics, improving efficiency and customer satisfaction in a competitive market.
Outlook
Looking ahead to the second half of 2025, the equipment rental industry will be closely tied to shifts in manufacturing sentiment, interest rates, and federal infrastructure spending. Business owners should consider stress-testing their revenue mix and rental utilization models to prepare for potential slowdowns in specific verticals. The strong employment and wage data suggest the industry remains fundamentally resilient, with consolidation and technology adoption likely to drive strategic opportunities in the months ahead.
Thinking about selling your equipment rental business in the next 1–3 years? Take our Sellability Score Today to understand your options.
Lion Business Advisors’ quarterly industry insights incorporate data and trends sourced from internal deal flow and buyer activity, Vertical IQ, and market comparables from platforms such as Axial and BVR (Business Valuation Resources).
Industry Insight Report: Equipment Rental Q2-2025
Mixed Signals from Manufacturing Cast a Shadow Over Equipment Rental Demand
As we move through Q2 2025, the commercial equipment rental and leasing sector is facing crosswinds from a slowing manufacturing sector and broader economic uncertainty. According to the Institute for Supply Management’s Spring 2025 Forecast, US manufacturing revenue growth is expected to slow to just 0.1%, a steep drop from prior projections. With capital expenditures projected to decline by 1.3% this year, equipment rental demand tied to manufacturing expansion may soften in the near term.
However, the long-term outlook remains strong, with industry sales forecasted to grow at a 4.53% compound annual rate from 2025 through 2029, outpacing overall economic growth. This is due in part to continued infrastructure investment, demand from energy and construction sectors, and the flexibility that rental offers in uncertain environments.
Key Trends
Manufacturing Headwinds Impacting Near-Term Demand
The latest ISM data shows declining optimism among manufacturers, a key customer base for commercial rental services.
Only 34% of surveyed manufacturers expect revenue growth in 2025, while 22% expect declines.
Trade policy volatility and inflation continue to delay major capital investments.
Labor and Wages Continue Upward Trend
Employment in commercial and industrial equipment rental rose 2.8% year-over-year in April and has climbed 41.3% over the past decade, significantly outpacing overall private sector growth.
Average wages in the sector rose 5.2% to $33.92/hour, reflecting strong labor demand and inflationary pressure.
Long-Term Growth Still in Focus
Despite current headwinds, the sector’s fundamentals remain healthy. Over the past three years, employment in the rental space has grown 18.9%, and wage trends remain aligned with the broader economy. Many firms are continuing to invest in digital booking platforms, fleet optimization tools, and automated logistics, improving efficiency and customer satisfaction in a competitive market.
Outlook
Looking ahead to the second half of 2025, the equipment rental industry will be closely tied to shifts in manufacturing sentiment, interest rates, and federal infrastructure spending. Business owners should consider stress-testing their revenue mix and rental utilization models to prepare for potential slowdowns in specific verticals. The strong employment and wage data suggest the industry remains fundamentally resilient, with consolidation and technology adoption likely to drive strategic opportunities in the months ahead.
Thinking about selling your equipment rental business in the next 1–3 years? Take our Sellability Score Today to understand your options.
Categories
Advisors