The American Rental Association is predicting a 10.2-percent increase in 2020 to reach $52.7 billion in the United States in its quarterly forecast, a slight increase from the previous forecast in October 2021. The improved forecast reflects the positive influence of expected increases in infrastructure spending. The revenue forecast also calls for equipment rental, which includes construction, industrial and general tool revenue, to increase by 6 percent in 2023, 2.9 percent in 2024 and 3.4 percent in 2025 to reach $59.5 billion.
Scott Hazelton, director of economics and country risk, IHS Markit, Andover, Mass., the company that provides data and analysis for the ARA Rentalytics forecasting service, said the continued strong forecast for growth corresponds with the optimism within the industry.
“This is a market that will surpass the peak revenue levels of 2019,” Hazelton said. “That means the impact of the coronavirus (COVID-19) on equipment rental revenue will be unwound by the end of the year.”
Construction and industrial equipment rental revenue is expected to lead the way with a 12-percent increase in 2022 to $38.9 billion, while general tool is expected to grow by 5 percent to reach $13.9 billion this year.
The largest uncertainty facing the industry that could impact the U.S. forecast is the current rate of inflation, which was recently reported to be 7.5 percent year over year.
“It is clear that supply chains have a lot to do with the current inflation rate and unwinding the current backlogs will increase the supply of goods and bring prices back down,” said John McClelland, PH.D., ARA’s vice president of government affairs and chief economist. “However, if it takes too long to unwind the supply chain bottlenecks, inflation can get backed into things like wages and cause the Federal Reserve to act more aggressively, slowing economic growth, which could have negative effects on the equipment and event rental industry.”
Investment in Inventory Ramps Up
Although supply chain issues have caused delays in delivery of fleet to equipment rental companies, the ARA forecast projects a 36.7-percent increase in investment in inventory to reach $14.4 billion in 2022, exceeding the previous annual high of nearly $13.8 billion spend in 2019. The forecast calls for another investment increase of 10.1 percent in 2023 to reach nearly $15.9 billion.
The ARA forecast for equipment rental revenue in Canada mirrors the positive expectations of the United States, calling for 5.5 percent growth in 2022 to reach nearly $4.4 billion, followed by growth of 5.7 percent in 2023, 3.5 percent in 2024 and 1.8 percent in 2025 to reach nearly $4.9 billion.