ARA forecasts 1.5% growth for U.S. rental in 2021
By Belinda SmartFebruary 17, 2021
The American Rental Association (ARA) has upgraded its U.S. rental growth forecast for 2021 to 1.5%, an improvement on the 0.3% growth it reported in November last year. ARA expects the market to rebound strongly in 2022 with growth of 11.3%.
The association said government stimulus programs and the rollout of the vaccine were building confidence, with rental expected to recover more quickly than the industries it serves.
Construction rental revenue, down by 11% in 2020, is expected to drop by 1% in 2021, while general tool rental revenue is expected to grow 4%. Party and event rental will grow 37% in 2021 against sharp declines in 2020.
“With the government stimulus programs and the rollout of the vaccine, people are beginning to have more confidence,” said John McClelland, ARA’s vice president for government affairs and chief economist.
Scott Hazelton, managing director of forecasting firm and ARA research partner IHS Markit, said the forecast was supported by “better than expected” economic data from late 2020. “From an equipment rental perspective, construction did not slow as much as expected, although we do expect it to remain a drag in 2021.”
He said manufacturing, a driver for equipment rental demand, had performed better than expected.
Meanwhile, a cause for optimism is the new Biden administration’s proposed $1.9-trillion American Rescue Plan. This had not been factored into the latest forecast, indicating that “the potential is for 2021 to surprise on the upside,” said Hazelton.
The ARA predicts an accelerated U.S. recovery in 2022, with revenues growing 11.3% to $55.9 billion, nearly 5% to $58.7 billion in 2023 and 3.1% to $60.5 billion in 2024. The construction, general tool and event and party rental sectors are expected to surpass peak revenues of 2019 by the end of 2022.
The forecast for Canada shows an expected 7.3% increase in equipment and event rental revenue in 2021 to $5.2 billion, with predictions of 7.2% growth in 2022, 6.5% in 2023 and 3.5% in 2024 to nearly $6.2 billion.
Canada reported a 12.2% drop in revenue in 2020, including a 12% decline in construction rental revenue, a 9% drop in general tool revenue and a decline of 35% in party and event rental. The three segments are expected to exceed peak revenues achieved in 2019 by the end of 2023.