ARA forecast shows equipment rental segment moving from relief to recovery
Equipment rental revenue, comprised of the construction/industrial and general tool segments, is expected to exceed its peak totals in 2022 according to the latest forecast released by the American Rental Association (ARA).
The updated forecast calls for equipment rental revenue to reach just under $47.7 billion in 2021, up 3.1 percent after a decline of 9.1 percent in 2020. However, the forecast calls for a robust 12 percent increase in construction/industrial rental revenue in 2022, taking the combined total for the two segments up to nearly $52.3 billion.
The growth rate is expected to be consistent at between 2 and 5 percent for the next three years according to the forecast with combined equipment rental revenues reaching $57.5 billion in 2025.
"The equipment rental segment is moving like the rest of the macro economy from relief to recovery. We are seeing a good uptick in business activity that is going to bring rental revenues back to pre-pandemic levels in 2022," says John McClelland, Ph.D., ARA vice president for government affairs and chief economist.
"The biggest concern going forward is the slump in nonresidential construction. However, a robust infrastructure bill from Congress would provide a significant long-term boost to that sector as well," McClelland says.
This is the first quarter that ARA has segmented the updated forecast to include just the construction/industrial and general tool segments. ARA currently is developing new ways to gather data and methodology to forecast results for the event rental segment with more information to be available later this year.
The new ARA forecast calls for construction/industrial rental revenue to grow 3 percent in 2021 to nearly $34.5 billion and then jump 12 percent to $38.5 billion in 2022. In 2023, the segment is forecast to grow another 5 percent to nearly $40.3 billion, followed by growth of 2 percent in 2024 to $41.5 billion and 3 percent in 2025 to $42.5 billion.
For general tool, the forecast is steady, calling for a revenue increase of 5 percent in 2021 to $13.2 billion and then growing 4 percent in 2022, and 3 percent during the next three years to surpass $15 billion in segment revenue in 2025.
Revenue for both segments is expected to surpass pre-pandemic peak levels reached in 2019 by the end of 2022.
The forecast for Canada calls for double-digit equipment rental revenue growth for both the construction/industrial (11 percent) and general tool (13 percent) segments in 2021 to reach a combined total of $3.98 billion.
Canada's equipment rental revenue for the two segments also is expected to grow between 5 and 8 percent in 2022 to reach $4.29 billion, surpassing the previous peak revenue of $4.04 billion in 2018. Growth is expected to slow down to 2 to 3 percent in the next years of the forecast to reach $4.73 billion in 2025.