Industries Thriving in the Recession

Contrary to public belief, some industries are doing well in the recession. Unemployment remains high, but the private sector is still swinging.

Author:
Jeanine Skowronski
Publish date:
Sep 24, 2010 7:00 AM EDT

Contrary to public belief, some industries are doing well in the recession. Unemployment remains high, but the private sector is still swinging.

Contrary to public belief, not all businesses are in the red. In fact, recent jobs numbers show that, though unemployment in general remains high, employment continues to rise in the private sector, where 67,000 jobs were added last month. Financial analysis company Sageworks, who collects profit and loss data from the private sector, confirms that business is booming in certain private industries. Unfortunately, their success may not paint as positive of a picture as one would think. MainStreet takes a look at the data, which compares sales revenue from year over year, to find out which private industries are, in fact, thriving in the recession and what that might say about our current economic climate. Photo Credit: Getty Images

Sageworks can determine how these businesses are performing because private industy CPAs use the company’s analysis software to benchmark their own financial performance against competitors. Profit and loss information is entered into a central database, then aggregated by the company. Financial data from more than 233,000 companies were used to compile the latest figures, which look at how much gross sales revenue grew in private industries during the past 12 months. Data are updated quarterly, according to Drew White, Sageworks’ CFO, though the figures always compare the industries financial performance from the same time the previous year. The most recent data measure sales performance from August 2009 to August 2010. Next, the top 10 performing industries are compared with historical data from 2005 to 2010. Photo Credit: Getty Images

The top two spots on Sageworks’ list of growing industries were claimed by two subdivisions of health care providers. Home health care services, which include private nurses and professional caregivers, increased sales revenue by 11.2% year over year, while pharmaceutical companies and medicine manufacturers followed close behind with an 11.1% increase. White attributes this to health care being largely recession-proof: People tend to treat illness as it occurs. However, demographics also come into play, thanks to the number of baby boomers entering retirement. As such, retirement homes and outpatient care facilities made the top 10 list, growing sales revenue by 6.1% and 8.3%, respectively. Photo Credit: ernstl

According to Melinda Crump, spokesperson for Sageworks, the positive side to the health care providers’ boom in business is that these companies are likely to hire because the nature of their business relies on human contact. An increase in the population of retirement homes, for example, would require more nurses or care providers to be added to the staff. “The growing demand for nurses and trained assistants will increase and create more jobs in health care as baby boomers reach retirement,” Crump says. “This includes RNs as well as other types of medical assistants depending on the level of care required.” Photo Credit: Getty Images

Software manufacturers enjoyed a 7.9% sales increase over the past 12 months, following a steady increase dating back to 2005. Revenue is generated by businesses looking to upgrade facilities and keep up with technological advancements. Unfortunately, many of these upgrades are initiated by companies to increase worker productivity and cut back labor costs. Their thinking, White explains, is why hire five people to do the job of one computer? Photo Credit: striatic

Tech and trade schools came in third, posting a 10.6% sales growth rate over the recent 12-month period. This increase follows a 11.6% rate posted in 2009. White explained that the growth is directly related to the floundering job market, as employees fearful of losing their jobs seek to expand their current skill sets. “Evolving technologies requiring education and additional skills are becoming more and more requisite for employment in every field,” Melinda Krump, a spokesperson for Sageworks, explains. Photo Credit: kosabe

Companies specializing in educational support services - think Kaplan or the Princeton Review, which both prepare students for higher education entrance exams – have also enjoyed more business during the recession. During the past 12 months, the sales revenue of these services has increased by 9.1%, making educational support services the fourth-ranked industry on Sageworks’ list. Morover, these companies experienced year-over-year sales increases since 2005 as more Americans head back to school . The resurgence in applicants, White points out, also relates to the need to stay competitive in the current job market. It also, unfortunately, is partially caused by the layoffs that drove many employees out of it. Photo Credit: fdecomite

Credit intermediation is another industry on the list that is capitalizing off of the nation’s woes. Private companies specializing in debt relief, loan restructuring or mortgage refinancing ranked eighth on Sageworks’ list, increasing their sales revenue by 7.7% during the past 12 months. White points out that the increase directly correlates to the recession, since before the height of the subprime mortgage crisis, these companies were posting a year-over-year decrease in sales. Revenue declined by 6.1% in 2008, compared to 2007, but then increased by 6% in 2009. Photo Credit: Andres Rueda

Raw material manufacturers, which produce steel, wood and other metals, are still struggling and posted the biggest decreases in sales revenue. Metal and mineral wholesalers took the top spot, showing a nearly 30% decrease. White says this can be directly attributed to the failing housing market as these goods are used primarily to build new homes. “We’re seeing the lack of demand [for new homes] trickle all the way down the supply line,” White says. Just how far does this reach? Air conditioner manufacturers are, well, feeling the heat. Sales are down this year by 21.4%. Photo Credit: woodleywonderworks

Want more information on who’s hiring? Check out MainStreet’s roundup of the hottest job growth industries! Photo Credit: Getty Images

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Industries Thriving in the Recession

Contrary to public belief, not all businesses are in the red. In fact, recent jobs numbers show that, though unemployment in general remains high, employment continues to rise in the private sector, where 67,000 jobs were added last month. Financial analysis company Sageworks, who collects profit and loss data from the private sector, confirms that business is booming in certain private industries. Unfortunately, their success may not paint as positive of a picture as one would think. MainStreet takes a look at the data, which compares sales revenue from year over year, to find out which private industries are, in fact, thriving in the recession and what that might say about our current economic climate. Photo Credit: Getty Images