For the first time since the Covid-19 pandemic adversely impacted the equipment and event rental industry last year, the latest ARA forecast calls for more positive growth in 2021 and beyond.
The previous forecast, released on Nov. 12, projected a modest uptick of 0.3 percent in equipment and event rental revenue in 2021, but the new forecast, released Feb. 16, shows an expectation of more than 1.5 percent growth in 2021 to surpass $50.2 billion.
This comes after a difficult 2020, where total industry revenues dipped 11.7 percent to just under $49.5 billion, with party and event showing a decline of 49 percent.
Construction, which showed an 11 percent decline in 2020, is expected to show a 1 percent drop in 2021 while general tool rental revenue is expected to grow 4 percent and party and event starts to recover from the devastation of 2020 to grow 37 percent in 2021.
Overall, the ARA forecast calls for accelerated recovery in 2022 with revenues growing 11.3 percent to $55.9 billion, then nearly 5 percent to $58.7 billion in 2023 and another 3.1 percent to $60.5 billion in 2024.
All three segments are expected to surpass peak revenues of 2019 by the end of 2022.
“With the government stimulus programs and the rollout of the vaccine, people are beginning to have more confidence," says John McClelland, Ph.D., ARA VP for government affairs and chief economist. "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,”
“Even the party and event companies that were hit so hard by cancellations starting last March are beginning to see a glimmer of hope ahead while ARA continues to work hard to bring more relief to that segment through additional government stimulus programs,” McClelland says.
Scott Hazelton, managing director, IHS Markit, the international forecasting firm that compiles data and analysis of the ARA Rentalytics members-only subscriber service as part of a research partnership with ARA, says the new forecast is more positive because economic data from the end of 2020 was better than expected.
“From an equipment rental perspective, construction did not slow as much as expected, although we do expect it to remain a drag in 2021. The larger surprise was the performance on manufacturing, which is also a source for equipment rental demand,” Hazelton says.
“Meanwhile, while we did see a resurgence of Covid-19 in January, we also had the release of significant quantities of vaccine," Hazelton says. "While actual vaccination implementation has had some bumps in the road, the fact that it is rolling out is a source of consumer and business confidence. There also are improved prospects for economic stimulus with the election of President Biden and Democrat control of the Congress.”
While the forecast reflects the passage of the latest Covid-19 economic relief bill passed in December, Hazelton says it does not incorporate the $1.9 trillion American Rescue Plan being proposed by the Biden administration.
“The potential is for 2021 to surprise on the upside,” he says.