Service industry growth picking up in middle market
BUSINESS RECORD STAFF Feb 1, 2016 | 4:40 pm
1 min read time
353 wordsAll Latest News, Economic DevelopmentThe burgeoning service economy is significantly outpacing more traditional industry sectors in its rate of business growth among middle-market companies, according to a new report from American Express Co. and Dun & Bradstreet Inc.
While manufacturing and wholesale trade continue to remain key industries for middle-market companies, the index shows a gradual shift in the industry composition of the middle-market sector, with service businesses quickly gaining ground, according to Middle Market Power Index: Exploring Generational Changes in Middle Market Industries. The report defines middle-market companies as those with revenues between $10 million and $1 billion.
Over half (54 percent) of middle-market enterprises are found in four industry sectors: manufacturing (17 percent), wholesale trade (13 percent), retail trade (12 percent) and business services (12 percent).
Seventeen percent of middle-market firms in business less than 10 years are in business services, indicating that this sector plays host to the next generation of businessmen and businesswomen, a trend that is likely to continue as the millennials further develop their careers.
Alternatively, only 5 percent of middle-market firms in business 50 years or longer are in the business services sector.
“The increase in the number of service industry firms moving from small enterprises into the middle-market reflects what is happening in the larger economy,” said Jeff Stibel, vice chairman of Dun & Bradstreet. “While manufacturing continues to be a critical piece of our economy, we are moving to a technologically advanced service economy, and these younger middle-market firms are both driving growth and, importantly, creating significant numbers of new jobs.”
Among Iowa’s 1,596 middle-market firms, 112, or 7 percent, have been in business less than 10 years. The fastest-growing segment within these younger firms is business services, and the breakdown of each state’s share of youngest middle-market firms is indicative of their pace with larger national economic trends.
Among states with a higher share of middle-market firms that have been in business for 50 years or more, two states stand out — Iowa and Vermont. In Iowa, 49 percent of middle-market firms have been in business for 50 years or more, significantly above the national average of 19 percent.
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