Make the Most of the Equipment Rental Forecast for 2023

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According to the American Rental Association (ARA) forecast published in November 2022, the equipment rental industry, which has been experiencing two years of rapid post-pandemic revenue growth, is poised to settle into a steadier pattern of single-digit increases from 2023-2026.

The forecast for equipment rental revenue, including construction equipment, industrial equipment, and general tool rental segments, projects an increase by 3.4% in 2023 to nearly $57.7 billion after growth of 11% in 2022 brought current revenue to almost $55.8 billion.

Following the projected growth in 2023, equipment rental revenue is expected to continue to grow to reach nearly $63.4 billion by the following percentages:

2.9% in 2024

3.3% in 2025

3.4% in 2026

According to John McClelland, Ph.D., ARA vice president for government affairs and chief economist the rental revenue forecast for the next four years is countercyclical to that of the overall economy. McClelland attributes this trend to infusion of funds for infrastructure in the U.S. resulting from the passage of the Infrastructure Investment and Jobs Act in November 2021.

As a result, the recent results and forecast are slightly different for segments like construction and industrial which are directly impacted by infrastructure spending. These segments saw 10.2% growth in 2021 and 12.7% growth in 2022 and are projected to grow by:

4% in 2023

2% in 2024

3% in 2025 and 2026

General Tool rental revenue growth has been more moderate at only 4.5% growth in 2021 and 6.2% growth in 2022. The forecast only calls for 1% growth in this segment in 2023 before jumping up to 5% in 2024 and 2025 followed by 4% in 2026.

ARA Vice President of Association Program Development, Tom Doyle said, “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.”

“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.

Canadian equipment rental revenue has followed a similar trajectory to the U.S.’ and is forecasted to continue to mirror the growth of the U.S., only slightly tamer.

In Canada, equipment rental revenue also showed a post-pandemic boost of 15.8% in 2021 and 11.1% in 2022 to reach $4.6 billion. The same as in the U.S., revenue growth is expected to 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% in 2023, 4% in 2024, 5.3%t in 2025 and 3.5% in 2026 to reach nearly $5.3 billion.

According to the latest economic impact survey conducted by the ARA, 63% of equipment rental respondents said the situation is the same in the 3rd quarter of 2022 with 26% saying it is getting better and 11% saying it is getting worse.

Survey respondents also are optimistic about the future with 71% of equipment rental respondents expecting revenue to increase compared to only 29% who expect a decrease compared to last year.

“Despite several headwinds from inflation, rising interest rates, labor and supply chain issues, these latest survey results show that ARA member companies are generally meeting those challenges and forecasting increases,” says Doyle.

Make the Most of the Momentum with Insights from 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 2023 and beyond, empowering their people and fueling growth.

Learn more with our on-demand webinar: Leverage Technology to Overcome Rental Labor & Equipment Challenges