Equipment rental revenue poised to continue growth in 2023 and beyond

Equipment rental revenue poised to continue growth in 2023 and beyondAfter 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 percent in 2023 to nearly $57.7 billion after growth of 11 percent in 2022 to reach almost $55.8 billion.

What the future holds

In subsequent years, expectations show that equipment rental revenue will grow 2.9 percent in 2024, 3.3 percent in 2025 and another 3.4 percent 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 percent respectively. There is an expectation that the segment will 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. It was 6.2 percent in 2022 and expectations say it will be 1 percent in 2023 and then 5 percent in 2024 and 2025 and 4 percent in 2026.

“There is variability in the forecast, depending on the end markets rental companies serve. However, nonresidential construction spending will remain strong. Customers continue to spend money 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 says.

More opinions

Scott Hazelton, director, S&P Global Market Intelligence, agrees that the outlook for the equipment rental industry is positive but adds that a slowdown is coming with a recession and an anticipated reduction in demand.

In addition, according to S&P Global Market Intelligence, 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. The forecast predicts Investment growth 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., the expected revenue growth will 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.

About ARA

The American Rental Association, Moline, Ill., is an international trade association for owners of equipment and event rental businesses. It is also for the manufacturers and suppliers of construction/industrial, general tool and party/event rental equipment. ARA members include more than 11,000 rental businesses and more than 1,000 manufacturers and suppliers. They are also located in every U.S. state, every Canadian province and more than 50 countries worldwide. The ARA begin in 1955. It is the source for information, advocacy, education, networking and marketplace opportunities. The group serves the equipment and event rental industry throughout the world.

Got more questions about your project?

  • Drop files here or
    Accepted file types: jpeg, jpg, gif, png, pdf, Max. file size: 50 MB.
      Allowed formats: jpeg, jpg, gif, png, pdf
    • How would you like us to respond?

    • Note: Some questions will be published anonymously with their answers at the end of this story to share with other readers.