ARA: Equipment rental revenue poised to continue growth in 2023 and beyond
(UC) — After two years of rapid post-pandemic revenue growth in 2021 and 2022, the equipment rental industry is expected to see single digit increases over the next four years according to the latest American Rental Association (ARA) forecast released in early November.
The forecast calls for equipment rental revenue — which includes the construction and industrial as well as the general tool segments — to increase by 3.4% in 2023 to nearly $57.7 billion after growth of 11% in 2022 to reach almost $55.8 billion.
In subsequent years, equipment rental revenue is expected to grow 2.9% in 2024, 3.3% in 2025 and another 3.4% in 2026 to reach nearly $63.4 billion.
“In the current forecast we see a definite softening in rental revenue growth, but we do not see negative growth,” says John McClelland, Ph.D., ARA vice president for government affairs and chief economist.
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% respectively. The segment is forecast to show a 4% increase in 2023, 2% in 2024, and 3% in 2025 and 2026.
On the general tool side, revenue growth was a more moderate 4.5% in 2021 and 6.2% in 2022 and is forecast to be 1% in 2023 and then 5% in 2024 and 2025 and 4% in 2026.
“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,” says 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,” Doyle said.
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