Stoney Creek, ON, August 5, 2022 – The Canadian Rental Association today revised its event and equipment rental industry economic forecast. Strong growth is expected to continue in 2022. Rental revenue is now expected to rise 17.0%, an increase of 7.5% over the previous quarterly forecast. As a result, the industry will surpass its pre-pandemic peak (2019) this year to reach $6.25B.
This forecast, compiled by IHS Markit on behalf of CRA, shows that Inflation is expected to play a significant role in high forecasted growth rates. As inflation subsides and pent-up demand is accommodated, the industry’s growth rate will slow to 3-4% in the longer term. By 2026 the Canadian event and equipment rental industry should surpass $7.1B.
Nathalie McGregor, CEO of the Canadian Rental Association points out that “under normal circumstances a nearly 10% upward revision in the industry would be cause for celebration. In this case we are primarily seeing the industry adapt to dramatically increasing labour, equipment, and other input costs”
In the broader economy, fears of a looming recession are modest for now. The timing of a recessionary event is uncertain given the relatively robust nature of the most recent domestic economic data. The marked slowdown outside Canada’s borders is sure to trickle across, with a negative effect specifically on investment, which is typical during most downturns. Trade can also be negatively affected, but there are no signs of that happening so far. Yet inflation is markedly higher than previously forecast and exceeds expectations that were laid out in the central bank’s April Monetary Policy Report. Labour markets are still very tight, with a record-low unemployment rate and record-high job vacancies.
The Bank of Canada is firmly entrenched and dedicated to fighting inflationary forces and helping ease constraints on capacity that would otherwise let the economy grow at its potential. This process is not short, nor will it be mild. Monetary policy action should temper demand but runs the risk of sparking a recession. Low real GDP growth is anticipated over the next several quarters.
In contrast to the low overall GDP growth all three segments of the event and equipment rental industry are expected to see strong growth over the forecast period.
The construction and industrial equipment rental sector is estimated to have grown by 8.2% in 2021 to $4.1B. In 2022, the segment is forecast to expand further at 14.3%. The expansion is fueled by a strong first half of the year in the construction markets, rising industrial production and growing oil sands investments. The sector will surpass pre-pandemic revenue peak in 2022 and reach $5.3B by 2026.
General tool rental revenue is estimated to have increased by 10.1% in 2021, wiping out the 8.3% decline seen in 2020 to set a new high point in rental revenue of $1.1B. Growth continues in 2022 with revenue rising 15.4%, supported both by inflation and a resilient construction market. Growth is expected to moderate substantially in the later years. By 2026 rental revenue in this segment will reach $1.4B.
Tent and event rental revenue was profoundly impacted by the pandemic, with 2020 revenue falling 64%. A gradual path to recovery began in 2021, but even with growth of 35% in 2021 and 99% in 2022, the segment doesn’t reach pre-pandemic highs until 2023. Almost complete re-opening of the economy allows the industry to return closer to the ‘norm’ and growth rates will slow down in 2023 and beyond. By 2026, tent and even revenue should reach $379M.
About CRA: (crarental.org) The Canadian Rental Association, Stoney Creek, ON., is the leading trade association for event and equipment rental businesses in Canada. CRA advocates on behalf of its members to government, regulators, and other stakeholders, and provides industry insights, best practices, education, and networking opportunities.