Watching sales figures and profit margins rise is always a good thing. The top growing industries over the past few years have a lot to be happy about, though much of their progress is part of an ongoing journey back from losses felt during the Great Recession.
Topping the list – compiled by financial analysis firm, Sageworks* – is the mining support industry, which has seen sales increases of almost 24% every year over the past five years. During that same period its profit margins grew more than 10% annually. The dramatic increases denote how much the industry lost during the Great Recession, says Sageworks analyst Kevin Abbas. “In 2009 they had a 20% decrease in sales growth whereas across all industries we show a 5% decrease,” Abbas explained. “The farther you fall, the farther you have to climb back up.”
Oil and gas extraction, which saw a 30% decline in 2009, was the 12th highest climber on the list, with almost 14% annual sales growth since the downturn. Net profit margins, though, averaged 12.44% increases each year.
The employment services industry showed annual jumps of almost 17% in sales. That’s people looking for work, says Abbas. “Who’s going to reap the rewards of those individuals looking for new positions or maybe needing temporary positions to bridge the gap before they can find full time employment? That would be those employment services firms that are either looking to place those individuals or providing temporary placement.”
Financial investment services also saw a bump, with sales figures rising 12% and profit margins hitting a 17.5% growth peak since over the past five years. Incorporating categories like wealth management, credit and loan services, as well as personal financial consulting services surrounding retirement; the category has been in demand as the larger economy climbs back from recession, says Sageworks analyst Libby Bierman. “That type of business is one where the margin is made based on experience in their specialization. It’s not like they’re being bogged down by inventory costs. Their profitability depends completely upon their ability to market their services.”
Legal services made strides in profit margin growth, showing almost 17% jumps each year over the past five years. Accounting, Tax Preparation, Bookkeeping, and Payroll Services – as an industry – also saw profits swell, to the tune of 16.21% annually. But none of those industries saw annual sales growth of over 6.5% which, according to Abbas, means they didn’t have as large a hole to climb out of after 2009. “Those industries weren’t necessarily hit as hard in the recession because everyone still needed their accountant to do their taxes and people always need lawyers.”
* Sageworks possesses a proprietary database of privately held company financial statements aggregated by industry through a cooperative data model with its clients. It separates the financial data from any firm-identifiable information and then aggregates the data by industry according to the North American Industry Classification System.
