Jun 1, 2023
Home service businesses resilient during economic slowdown
Green, cleaning, contracting, and construction segments are showing positive revenue growth amidst the economic turmoil, says the ‘Home Service Economic Report: 2023 Q1 Edition’ from Jobber, an operations management software company for the home service business. The report says home maintenance spending has remained stable despite the economy, while home improvement spending is showing higher growth but with more volatility. This shows that during economic slowdowns, discretionary spending slows while replacement spending is more resilient in both minor and major recessions. As such, the home service category has continued to demonstrate resilience during the first quarter of 2023. Contractors and industry professionals say median revenue growth is slowing, but has still increased by approximately 3% in March relative to last year, which was a historically high growth year. On a two-year compound annual growth rate (CAGR), median revenue grew between 10 to 20% from the first quarter of 2021 to the first quarter in 2023, which is quite healthy. The first quarter of 2022 experienced exceptionally strong growth in year-over-year revenue, with a 20 to 30% jump as the economy continued to rebound from the pandemic. Even when compared to this phenomenal quarter, home service businesses across all segments – green, cleaning, contracting, and construction – in the first quarter have successfully maintained positive year-over-year revenue growth. The green segment, which includes lawn care, landscaping, and other related outdoor services, experienced revenue growth of around 5 to 10% year-over-year; the cleaning segment median revenue growth stayed positive; contracting, which includes electrical, handiwork, HVAC, plumbing, and other non-construction services, leveraged increased pricing power to generate year-over-year revenue growth of 12% in January, before flattening in February and March; and construction businesses grew revenues in the first quarter year-over-year, despite a decrease in new work scheduled.
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