The latest updated quarterly American Rental Association (ARA) forecast expects equipment rental revenue to rise 10.2% in 2022 and reach $52.7 billion in the United States.
The report shows a slight increase from the previous forecast in October 2021, reflecting the positive influence of expected increases in infrastructure spending.
According to the forecast, equipment rental, including construction, industrial, and general tool revenue, will increase by 6% in 2023, 2.9% in 2024, and 3.4% in 2025 to reach $59.5 billion.
The continued strong forecast for growth corresponds with the optimism within the industry, said Scott Hazelton, managing director, IHS Markit, the international forecasting firm that compiles data and analysis of the ARA Rentalytics as part of a research partnership with ARA.
"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 said.
Construction and industrial equipment rental revenue is expected to lead the way, with a 12% increase in 2022 to $38.9 billion.
The general tool category is expected to grow by 5% to reach $13.9 billion this year.
The current rate of inflation, 7.5%, is still the most significant uncertainty facing the industry that could impact the U.S. forecast.
John McClelland, Ph.D., ARA’s vice president for government affairs and chief economist, said supply chains are still a major part of the current inflation rate, bringing prices back down once backlogs are reduced.
"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 said.
Although supply chain issues have delayed fleet delivery to equipment rental companies, the ARA forecast projects a 36.7% increase in investment in inventory to reach $14.4 billion in 2022. That exceeds 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.
For Canada, the ARA forecast for equipment rental revenue mirrors the positive expectations of the United States. It calls 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.
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