Looking Ahead: How to Make the Most of the Equipment Rental Forecast


Due to the global health crisis, many industries faced incredibly trying times in 2020, and the equipment rental sector is not immune from this. With revenues down, many companies are turning towards experts to forecast the oncoming 2021 year in hopes of good news.

In November 2020, the American Rental Association put out a revenue forecast for the next two years based on analytics, and the results were somewhat encouraging.

In February 2021, the ARA updated their forecast with an even more optimistic outlook

Once again, the ARA updated their outlook again in May 2021.

Initial Assessment: Modest Short-Term Gains Point to Recovery

The ARA’s initial forecast pointed towards modest gains in the 2021 year, projecting growth of 0.3 percent.

As of mid-February, that projection has been revised show an expectation of more than 1.5 percent growth in 2021, surpassing $50.2 billion.

United States Rental Revenue Forecast

ARA vice president for government affairs and chief economist, John McClelland, Ph.D., credits government stimulus programs and vaccine rollouts with the increased confidence in the equipment rental industry to rebound after 2020’s losses. 

“The equipment and event rental industry often recovers from adversity more quickly than the industries it serves, and it looks like this is happening again,” says McClelland.

Scott Hazelton, managing director of IHS Markit noted that “from an equipment rental perspective, construction did not slow as much as expected, although we do expect it to remain a drag in 2021.”

Accoring to Hazelton, “the larger surprise was the performance on manufacturing, which is also a source for equipment rental demand.”

New Analysis Shows Accelerated Growth

The ARA’s forecast indicated that beyond next year, the growth would accelerate as relief becomes recovery.

As of May 2021, the updated forecast calls for equipment rental revenue to reach just under $47.7 billion in 2021, up 3.1%. This forecast calls for a robust 12% increase in construction/industrial rental revenue in 2022, taking the combined total for the construction/industrial rental and general tool rental segments up to nearly $52.3 billion.

The ARA expects this growth rate to be consistent at between 2% and 5% for the next three years. Ultimately, analysts  forecast that combined equipment rental revenues will reach $57.5 billion in 2025.

According to McClelland, “The equipment rental segment is moving like the rest of the macro economy from relief to recovery. We are seeing a good uptick in business activity that is going to bring rental revenues back to pre-pandemic levels in 2022.”

“The biggest concern going forward is the slump in nonresidential construction. However, a robust infrastructure bill from Congress would provide a significant long-term boost to that sector as well,” McClelland says.

Construction/Industrial Rental Revenue Forecast

The new ARA forecast calls for construction/industrial rental revenue to grow in the following ways over the next few years:

  • 2021: 3% to nearly $34.5 billion
  • 2022: 12% to $38.5 billion
  • 2023: 5% to nearly $40.3 billion
  • 2024: 2% to $41.5 billion
  • 2025: 3% to $42.5 billion.

General Tool Rental Revenue Forecast

For general tool, the forecast is steady, calling for a revenue increases over the next several years of:

  • 2021: 5% to $13.2 billion
  • 2022: 4%
  • 2023 – 2025: 3% to surpass $15 billion

Based on these numbers, revenue for both segments is expected to surpass pre-pandemic peak levels reached in 2019 by the end of 2022.

According to Hazelton, “Construction activity follows architectural design by 12 to 18 months, which suggests a strong rebound in 2022. The energy sector has also begun to recover but will improve further next year as major economies in Europe and Latin American emerge from the pandemic and air traffic returns to something approaching 2019 levels.”

“Further stimulus via an expanded infrastructure bill could push growth higher. The key takeaway is that we expect equipment rental revenue to recover to 2019 levels in 2022; it is a multi-year event, with the strongest recovery expected in 2022,” Hazelton says.

Forecast Continues to Climb in Canada

The forecast for Canada calls for double-digit equipment rental revenue growth for both segments in 2021 to reach a combined total of $3.98 billion.

  • Construction/Industrial: 11%
  • General Tool: 13% 

Canada’s equipment rental revenue for these two segments also is expected to grow moving forward:

  • 2022: between 5%-8% to reach $4.29 billion (surpassing the previous peak revenue of $4.04 billion in 2018)
  • 2023-2025: 2%-3% to reach $4.73 billion

Monitor Your Health in Rental360

Rental360, built in the Acumatica framework, offers equipment rental companies key tools needed to diagnose and monitor the health of their business. Foremost among them are real-time dashboards, offering key analytics and insights across all aspects of a business. These ARA certified dashboards offer deep drill-in capability to users, as well as customization and personalized views. In addition to financial and accounting data these dashboards also provide users industry-specific information such as equipment utilization.

By choosing Rental360 to power their systems, equipment rental companies arm themselves with the tools needed to act upon the positive forecasts for 2021 and beyond, fueling recovery and growth.

Learn more by watching a recording of our recent webinar “What Makes Modern ERP More than Merely Rental Software”

Originally posted November 17, 2020. Updated with more complete information on March 3, 2021 and May 17, 2021.