Economics & Research Blog
The Growing Service Economy Sectors
Last week we listed the growth of various manufacturing businesses from Commerce Department data.
By Dr. Joe Webb
Published: August 13, 2007
Last week we listed the growth of various manufacturing businesses from Commerce Department data. There is no such report for non-manufacturing businesses, but the Institute for Supply Management mentions the industries that are growing in its monthly releases. The lists are pretty consistent from month to month, and it's worth noting them from a print sales perspective. Working with growing customers and grabbing their coattails is always a good strategy. They're also prime candidates for outsourcing various tasks to print businesses because growth always puts a strain on their staffing, especially with unemployment at such low levels.
Growing industries as cited in their latest non-manufacturing report were finance & insurance, accommodation & food services, transportation & warehousing, information, construction, public administration, educational services, retail trade, and wholesale trade. Some of these deserve comment. Though we keep hearing that savings rates are always declining or too low, those data do not include holdings in retirement and pension plans. With more of the baby boom retiring every year, this industry will remain vibrant and competitive, despite their recent problems. The travel industry is benefiting from two trends: retirement and travel being considered as “gifts.” Travel has replaced Christmas gifts in many families, such as that trip to Disney World from grandma and grandpa. Transportation is rarely mentioned as a growth industry. It is one of the more exciting and underappreciated factors in worldwide economic growth, with massive investments in information infrastructure and capital goods.
Six industries reporting decreased activity were agriculture, forestry, fishing & hunting, real estate, rental & leasing, professional, scientific & technical services, arts, entertainment & recreation, and health care & social assistance. There are a wide range of reasons for these. Agriculture's share of the economy has been declining since the industrial revolution. Sure, we still have to eat, but it's an industry that is less important, no matter what they do to support corn and ethanol. Most of the growth in agriculture is in emerging markets. Forestry has been having a wide range of problems for a long time, with the most attractive area in the long term being construction goods. The housing slump creates a pause in this, of course, and does so for real estate as well. Rental and leasing may be hit by the credit tightening. Professional, scientific & technical services are typically quite resilient and will often be in the growth list, and is a long-term growth market. Arts, entertainment & recreation, tends to pull back in slower economic times, but is generally positive for the longer outlook with growing populations and rising wealth and education. Health care & social assistance is a long-term growth market because of population growth and longer life spans. So some of these markets identified in the ISM report may be in lulls at this time, just like some of the growing markets will have their own retrenchments at another time.
Generally, these growth and slowdown periods last for more than just a few months, and sometimes years, so working to identify growth markets for communications is something that should be done on a regular basis. After all, most sales cycles take months to fully develop, and can take a long time to gain the confidence of new buyers at the expense of their current suppliers.
A critical step is how to find prospects that are in these business classes. Many printing companies target their prospects solely on geography. It is not until you target customers by what they do that you can fully understand the kinds of integrated communications programs they need assistance with, and get out of selling print as a generic and undifferentiated product.