Equipment rental revenue, comprised of the construction/industrial and general tool segments, is expected to explode past its previous peak totals in 2022, according to the latest forecast released by the American Rental Association.

The updated forecast calls for equipment rental revenue to reach just under $47.7 billion in 2021, up 3.1% after a decline of 9.1% in 2020. However, the forecast calls for a 12% increase in construction/industrial rental revenue in 2022, taking the combined total for the two segments up to nearly $52.3 billion.

The growth rate is expected to be consistent at between 2% and 5% for the next three years, according to the forecast, with combined equipment rental revenues reaching $57.5 billion in 2025.

“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,” John McClelland, Ph.D., vice president for government affairs and chief economist for the ARA, said. “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.”

This is the first quarter that the ARA has segmented the updated forecast to include just the construction/industrial and general tool segments. The ARA currently is developing new ways to gather data and methodology to forecast results for the event rental segment, with more information to be available later this year.

The new ARA forecast calls for construction/industrial rental revenue to grow 3% in 2021 to nearly $34.5 billion and then to jump 12% to $38.5 billion in 2022. In 2023, the segment is expected to grow another 5% to nearly $40.3 billion, followed by growth of 2% in 2024 to $41.5 billion and 3% in 2025 to $42.5 billion.

For general tool, the forecast is steady, calling for a revenue increase of 5% in 2021 to $13.2 billion and revenue increases of 4% in 2022 and 3% during the next three years to surpass $15 billion in segment revenue in 2025.

Revenue for both segments is expected to surpass the pre-COVID-19-pandemic peak levels reached in 2019 by the end of 2022.

“While the overall U.S. economy is recovering strongly, the sectors that drive equipment rental are coming along more slowly. In particular, the nonresidential construction and infrastructure sectors are still contracting and may not see growth until the end of the year. However, leading indicators, such as the architectural billings index, have begun to show strong improvement,” Scott Hazelton, director of economics and country risk at IHS Markit, the economic forecasting firm that partners with the ARA to provide data and analysis for the ARA Rentalytics subscription service for ARA members, said. “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.”

The forecast for Canada calls for double-digit equipment rental revenue growth for both the construction/industrial (11%) and general tool (13%) segments in 2021, with revenues reaching a combined total of $3.98 billion.

Canada’s equipment rental revenue for the two segments also is expected to grow between 5% and 8% percent in 2022 to reach $4.29 billion, surpassing the previous peak revenue of $4.04 billion in 2018. Growth is expected to slow down to 2% to 3% in the next years of the forecast to reach $4.73 billion in 2025.