ARA forecasts 37% rise in investment in 2022
By Belinda Smart22 February 2022
The latest updated quarterly American Rental Association (ARA) forecast says construction and industrial equipment rental revenue is expected to lead a US rental industry rebound to exceed pre-Covid levels this year, with a 12% increase in 2022 to $38.9 billion.
Expected increases in infrastructure spending have been cited as a key driver for the positive outlook, and the impact of Covid-19 is set to unwind by year end, the association said.
Despite supply chain driven delays in fleet deliveries, the ARA has also forecast a 36.7% increase in investment in inventory to reach $14.4bn in 2022.
This exceeds the previous annual high of nearly $13bn spent in 2019.
The ARA’s overall rental forecast now calls for a 10.2% increase in 2022 to reach $52.7m in the US, up from the previous forecast in October 2021, reflecting the positive influence of increases in 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% in 2024 and 3.4% in 2025 to reach $59.5 billion.
Scott Hazelton, director, economics and country risk, IHS Markit, the company that provides data and analysis for the ARA Rentalytics forecasting service, says the continued strong forecast for growth indicates the market will surpass the peak revenue levels of 2019.
“That means the impact of the coronavirus (Covid-19) on equipment rental will be unwound by the end of the year,” said Hazelton.
General tool revenue is expected to grow by 5% to reach $13.9 billion this year.
However the ARA also said inflation, recently reported to be 7.5% year over year, could impact the US forecast, driven by supply chain delays.
“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 down,” said 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,” he said.
Beyond 2022, the forecast calls for another inventory investment increase of 10.1% in 2023 to reach nearly $15.9 bn.
The forecast for Canada mirrors the positive expectations of the US, calling for 5.5% growth in 2022 to reach nearly $4.4 bn followed by growth of 5.7% in 2023, 3.5% in 2024 and 1.8% in 2025 to reach nearly $4.9 bn.