While the manufacturing sector struggles, the services sector is doing just fine, thanks
While the manufacturing sector struggles, the services sector is doing just fine, thanks
On Tuesday, the Institute for Supply Management reported that the manufacturing sector contracted in August for the fifth month in a row. Other indicators found that new orders have fallen, along with production and employment.
On Thursday, the ISM will put out its latest survey on the services sector. And compared to manufacturing, the services sector’s news has been far more upbeat. The sector expanded in 47 of the last 50 months, according to the ISM’s July survey.
The services sector is a massive category, with businesses ranging from local restaurants and laundromats to accounting firms and construction companies. One of those businesses is JessFinessed, a company in the Boston area that stages houses for sale with furniture, paint and lighting.
Owner Jess Harrington said the last few years have been busy, even while home sales have struggled amid high mortgage rates and tight inventory. Harrington said that’s because when home sales are slow, her services are needed most.
“That’s when my phone’s ringing a lot,” Harrington said. “It’s like, ‘OK, we’ve got to pull this listing, it hasn’t sold, we’re going to re-launch it, we need to rebrand it.'”
Now that mortgage rates have been coming off their recent highs, and more people are shopping for homes, Harrington said things have gotten even busier.
“There’s a big fall market rush right after Labor Day,” Harrington said. “We’re getting all of these homes ready, photographed. I think we did six stages this week, six stages last week.”
As a result, Harrington said she’s trying to expand her business to be able to move and store more furniture.
“I am about to purchase my first box truck,” Harrington said. “I’ve been renting one. I brought three full-time movers on at the beginning of the year. I’m running a little bit short on warehouse space, so that’s a bit of a limit to growth.”
Some businesses in the service sector haven’t had such steady work over the last few years. Heather Whaling runs a marketing company in Ohio called Geben Communication. It helps other businesses with public relations, digital marketing and content creation.
Whaling said last year was the worst in her company’s history. A lot of her clients were worried about a possible recession. But this year, business has turned around.
“We’re on track to close more new business than any other year, our client retention rates are the strongest we’ve ever seen, and all the financial success metrics are outperforming our projections,” Whaling said.
Whaling said one reason is that a lot of her clients are more optimistic about the economy and more willing to spend on marketing. But Whaling also credits a big change she made to the structure of her business: she merged her PR, digital and content departments, in order to help her clients more easily sign up for multiple services.
“Clients are asking us to spend more time working on their communication, and so then that translates into additional revenue from the business side,” Whaling said.
Whaling said she could do that because as a service-sector business, she doesn’t sell physical products.
“If I was a different type of industry, and sitting on all of this inventory that I couldn’t move, then I would not be able to pivot as quickly based on what I’m seeing in the market,” Whaling said.
A lot of businesses in the services sector are taking steps to ensure they continue to do well.
Tiffany Turner is the CEO of Adrift Hospitality, which operates hotels and restaurants on the Oregon and Washington coasts. Like a lot of Heather Whaling’s clients, Turner’s been spending more on marketing to convince travelers to come visit.
“In 2020, 2021, and even into 2022, people didn’t want to get on airplanes,” Turner said. “Now, people want to get on airplanes, it’s pretty clear, and so we have to draw them to our destination.”
Turner’s also been trying to ensure she can hang on to her roughly 175 employees, especially since the labor market’s been tight over the last few years. Turner said she’s been focusing on company parties, flexible holiday policies, and a month-long sabbatical available to workers who’ve been there at least seven years.
“The people who’ve taken advantage of that — we implemented it a year and a half ago — have really enjoyed it, and we have quite a few who are able to take advantage of it this year,” Turner said.
Turner said keeping her employees happy can help her control costs.
“Turnover costs a lot of money,” Turner said. “So creating jobs that are mostly enjoyable and mostly do-able, where people can have work-life balance, and want to continue to work for our company, actually creates efficiency.”
Right now, that’s an issue on the minds of a lot of businesses in the service sector, which employs almost 90% of all workers in the US.
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