home service economic report

COVID-19 Edition

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Introduction

Small businesses make up 47% of the private labor force and contribute 44% to GDP in the United States1. Tens of thousands of plumbers, residential cleaners, landscapers, and more, keep track of jobs and charge their customers for work using Jobber. Our position as a leading business management platform for Home Service businesses uniquely enables us to identify aggregate trends and insights in this important small business segment.

The COVID-19 Impact

As COVID-19 made its way across the United States, the economic impact to every type of business has been significant. Over a period of two weeks, consumers and businesses were mandated to completely change their behaviors. For e-commerce businesses, this time has provided a tailwind, whereas other businesses, such as sit-in restaurants, have seen sharp declines.

It was unclear at the outset what the impact of the COVID-19 response would be on the Home Service category. Many industries including sanitation and disinfecting services, HVAC, plumbing, pest control, and others, are deemed essential across the United States. On the other hand, the essential status of businesses such as lawn care and construction vary state-to-state.

By reviewing Jobber’s proprietary data gathered from 90,000+ Home Service professionals across 50+ different industries, this report will show the impact of the COVID-19 pandemic on the Home Service category from the start of the year until May 10, 2020. The report also compares the Home Service category’s performance to the U.S. GDP over the last couple of years, and how the category has fared during this recent pandemic compared to others such as Grocery Stores, Clothing Stores, and Restaurants.

Home Service Category Performance

Looking at the data, it’s clear that the Home Service category overall has seen consistent positive growth over the past few years. On an annual basis, the typical Home Service business grew 12% in 2018 and 11% in 2019. By comparison, the overall U.S. GDP grew 2.9% in 2018 and 2.3% in 20192.

Growth in Median Revenue

Home Service began 2020 on the same positive growth trend. Up until mid March, the category was growing an average of 13% compared to the same period in 2019. However, starting with California on March 19, many states across the country started implementing stay-at-home directives as a result of the pandemic. By March 23, there were nine such statewide orders in place, and by March 30, that number hit 30.

This directly impacted many Home Service businesses across the country as all non-essential businesses were mandated to shut down physical operations. As a result, towards the end of March, revenues for Home Service businesses fell around 30% compared to earlier in the year. This period of decline lasted around five weeks, followed by a recovery that began towards the end of April. This aligns with stay-at-home orders being lifted in some states such as Georgia and Oklahoma starting April 24, with many others following suit in the days and weeks following.

Newly scheduled work is an important early indicator of the success or decline of Home Service businesses. In the following charts a clear decline in newly scheduled work can be seen during the week ending March 22, and the impact on revenue can be seen the following week. The decline in new work being scheduled has continued throughout April, and dropped by 30% compared to earlier in the year, as well. There have been signs of recovery towards the end of April, with a significant improvement seen during the week ending May 10. It’s expected for this trend to continue with improvements in revenue over the course of May.

New Work Scheduled
Median Revenue

Home Service Compared to Other Categories

Using the U.S. Census Bureau data for March and April 2020 as benchmarks, Home Service businesses were less impacted by the COVID-19 pandemic compared to other categories. 

In March, the Home Service category showed revenue growth of 12% year-over-year, while Restaurants saw a decline of 28%, and Clothing Stores fell by 51%.

In April, the impact of the pandemic and related restrictions continued, resulting in further decline across all categories compared to March. Home Service businesses saw revenue decline by 18% year-over-year compared to April 2019, while Restaurants fell by 49% and Clothing Stores by 89%, compared to the same period last year.

Year Over Year Growth³

As the Home Service category consists of a large variety of businesses, it’s useful to segment the data to better understand the impact of the pandemic on different kinds of industries. To do this, the data has been split into three segments: Cleaning, Contracting, and Green businesses.

Cleaning

The Cleaning segment consists of industries such as residential and commercial cleaning, window washing, and pressure washing. These businesses are typically non-seasonal, but they do see a small spike for spring cleaning. This segment has been the most affected since social distancing and isolation measures have been adopted across the country.

New work being scheduled for these businesses started getting hit earlier than most, with a decline in growth seen by February 23. The most significant drop happened a month later in the week ending March 22, when there was an immediate drop in business of nearly 25% in one week.

This segment was seeing stronger than average revenue growth at the start of the year, but since mid-March, revenues have fallen by nearly 35% compared to the same time in 2019. The most significant drop in revenue occurred the week ending March 29, following the large decrease in new work being scheduled the week prior. From where these businesses were earlier in the year, revenue has seen a decline of more than 45%, with residential cleaning being the worst hit.

In the recent weeks, however, there has been an improvement in new work being scheduled for these businesses. That should help revenue recover towards the end of May.

New Work Scheduled

Median Revenue

Contracting

The Contracting segment consists of industries such as construction, electrical, plumbing, and HVAC. 

This segment saw a steep decline in new work being scheduled when the stay-at-home orders first came into effect. After a trough that lasted three weeks, there has been a relatively quick recovery towards the end of April and into May. 

These businesses saw industry-average growth earlier this year, but have since seen a decline of over 25% in revenue growth. Compared to the same time period last year, they have seen a drop of close to 15% in revenue during the impacted period. The data also shows a slight turnaround in the revenue growth trend through the end of April, which is expected to continue in May, following the increase in new work scheduled.

New Work Scheduled

Median Revenue

Green

The Green segment consists of industries such as lawn care, landscaping, and other related outdoor services. These businesses tend to be seasonal, and generally do a lot of work in the spring.

This segment typically shows high variance in revenue during the January to March period, and this year is no different. Although also affected, Green businesses have fared relatively better during these times presumably because most of their work tends to be outdoors, where social distancing rules are easier to follow.

This is the time of year where these businesses usually generate most of their revenue, and the data shows missed opportunity due to this pandemic. They have seen a drop of over 10% in revenue compared to earlier in the year, and their new work being scheduled was roughly 15% lower than expected during the impacted period. There has been a turnaround in new work scheduled in May, however, which should help revenue growth improve for these businesses towards the end of the month.

New Work Scheduled

Median Revenue

Future Outlook

The Home Service category seems to have weathered this historic period well compared to many other categories, but it’s not coming out of this pandemic unscathed. While Home Service didn’t experience the same devastating losses as Clothing Stores or Restaurants, it has still seen a 30% revenue loss compared to expectation. There is also a large variance within the category itself, with Green businesses being able to tolerate these conditions better than others such as Cleaning.

The end of April has been a turning point for the category, with positive signs showing in early indicators such as new work being scheduled. However, the recovery is likely to be slow and correlated with government policies around lifting the stay-at-home orders and relaxing some of the social distancing rules currently in place. As the government mandated orders conclude and society returns to relative normalcy, new market dynamics could emerge as the economy enters a recessionary period.

Data Sources & Methodology

  1. The small business data provided is from the U.S. Small Business Administration Office of Advocacy. The specific metrics shared are from a Research Summary published by the organization as well as an annual FAQ they provide.
  2. The GDP data is from the U.S. Bureau of Economic Analysis.
  3. All category data outside of Home Service comes from the U.S. Census Bureau’s advance monthly retail trade report. The YOY change in Median Revenue has been used as a proxy for the Home Service category data point, which is the Home Service equivalent to ‘same-store sales growth’. As a result, we believe this to be a conservative estimate for the category as a whole because it doesn’t include new business starts, while the U.S. Census Bureau’s trade report includes all sales from new business starts as well as same-store sales.
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