The equipment rental industry is expected to see single digit increases over the next four years following two years of rapid post-pandemic revenue growth in 2021 and 2022, according to the latest American Rental Association (ARA) forecast released in early November.
While the forecast calls for a slowing of rental revenue growth, it does not project negative growth.
“There is variability in the forecast, depending on the end markets rental companies serve. However, nonresidential construction spending will be strong, and money continues to be spent from government stimulus programs, which both are positives for the rental industry,” said Tom Doyle, ARA vice president, association program development. “In addition, the supply chain is improving, which can help alleviate the backlog of equipment orders, allowing equipment rental companies to expand inventory to meet demand, which adds to the positive outlook for the industry in 2023 and beyond."
Other key points of the survey include:
- Equipment rental revenue, which includes the construction and industrial as well as the general tool segments, is expected to increase by 3.4 percent in 2023 to nearly $57.7 billion after growth of 11 percent in 2022 to reach almost $55.8 billion.
- In subsequent years, equipment rental revenue is expected to grow 2.9 percent in 2024, 3.3 percent in 2025 and another 3.4 percent in 2026 to reach nearly $63.4 billion.
- The construction and industrial segment, according to S&P Global Market Intelligence, the forecasting firm that compiles data for the ARA forecast and the ARA Rentalytics subscription service, showed double-digit revenue increases in 2021 and 2022 at 10.2 and 12.7 percent, respectively. The segment is forecast to show a 4 percent increase in 2023, 2 percent in 2024 and 3 percent in 2025 and 2026.
- On the general tool side, revenue growth was a more moderate 4.5 percent in 2021 and 6.2 percent in 2022 and is forecast to be 1 percent in 2023 and then 5 percent in 2024 and 2025 and 4 percent in 2026.
- Investment in construction and industrial equipment now is expected to decline slightly in 2023 after growth of 55.1 percent in 2021 and 40 percent in 2022. Investment growth is forecast to be 4.8 percent in 2024 and 6.4 percent in 2025.
- In Canada, equipment rental revenue also showed a post-pandemic boost of 15.8 percent in 2021 and 11.1 percent in 2022 to reach $4.6 billion. The same as in the U.S., revenue growth is expected to settle into a single-digit pattern over the next four years.
- The ARA forecast calls for equipment rental revenue in Canada to increase by 1.6 percent in 2023, 4 percent in 2024, 5.3 percent in 2025 and 3.5 percent in 2026 to reach nearly $5.3 billion.
