The latest updated quarterly American Rental Association (ARA) forecast for equipment rental revenue now calls for a 10.2% increase in 2022 to reach $52.7 billion in the United States, a slight increase from the previous forecast in October 2021, reflecting 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% in 2023, 2.9 percent in 2024 and 3.4% in 2025 to reach $59.5 billion.
Scott Hazelton, director, economics and country risk, IHS Markit, Andover, Mass., the company that provides data and analysis for the ARA Rentalytics forecasting service, says 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. That means the impact of the coronavirus (COVID-19) on equipment rental revenue will be unwound by the end of the year," Hazelton says.
Construction and industrial equipment rental revenue is expected to lead the way with a 12% increase in 2022 to $38.9 billion while general tool is expected to grow by 5%, 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%, 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," says John McClelland, ARA vice president for 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," McClelland says.
Although supply chain issues have caused delays in delivery of fleet to equipment rental companies, the ARA forecast projects a 36.7% increase in investment in inventory to reach $14.4 billion in 2022, exceeding the previous annual high of nearly $13.8 billion spent in 2019.
The forecast calls for another investment increase of 10.1% 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% growth in 2022 to reach nearly $4.4 billion followed by growth of 5.7% in 2023, 3.5% in 2024 and 1.8% in 2025 to reach nearly $4.9 billion
