ARA: Equipment rental revenue growth continues

The latest updated quarterly American Rental Association (ARA) forecast for equipment rental revenue in the U.S. calls for a 10.2 percent increase in 2022, to $52.7 billion.

The growth is a slight increase from the previous forecast in October 2021, which the ARA says reflects the positive influence of expected increases in infrastructure spending.

The revenue forecast also calls for equipment rental revenue, which includes construction, industrial and general tools, to increase by 6 percent in 2023, 2.9 percent in 2024 and 3.4 percent in 2025. That forecast would have revenue reaching $59.5 billion in 2025.

Scott Hazelton with IHS Markit, the company that provides data and analysis for the ARA Rentalytics forecasting service, says the continued strong forecast corresponds with the optimism within the industry.

“This is a market that will surpass the peak revenue levels of 2019,” says Hazelton, who serves IHS Markit as director of economics and country risk. “That means the impact of the coronavirus 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 rental revenue is expected to grow 5 percent to reach $13.9 billion this year.

The largest uncertainty facing the industry that could impact the forecast is the current inflation rate, which was recently reported to be 7.5 percent year-over-year, according to the ARA.

“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,” says John McClelland, ARA’s vice president for government affairs and chief economist. “However, if it takes too long to unwind the supply chain bottlenecks, inflation can get back 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.”

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. That would exceed the previous annual high of nearly $13.8 billion spent 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 expectations in the U.S., projecting a 5.5 percent growth in 2022 to reach nearly $4.4 billion, followed by a 5.7 percent growth in 2023, 3.5 percent in 2024 and 1.8 percent in 2025, to reach nearly $4.9 billion.