2015 saw stronger gains in the U.S. franchise sector than were projected the year before, marking the fifth straight year of strong, steady growth despite a sluggish economy.
As we head into the new year, IHS Economics has released its Franchise Business Economic Outlook for 2016, and the projections look promising.
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We’ve pulled 5 of the biggest takeaways from the new report to give you a brief guide to the economic year ahead.
1. Steady growth is expected for 2016
The IHS expects the number of franchise establishments to grow by 1.7% in 2016, on track with the pace of growth in 2015.
2. Employment growth will outpace the rest of the economy
For the past five years, the franchise sector has created more jobs industry-wide than the rest of the economy, and that trend is expected to continue into 2016.
3. GDP of the franchise sector will exceed the growth of U.S. GDP
The gross domestic product (GDP) of the franchise sector is set to increase by 5.6% to $553 billion in 2016, outpacing the growth of U.S. GDP at 4.4%.
4. Real consumer spending growth is expected to increase
The consumer outlook for 2016 will remain as positive as it was last year. Real disposable income is expected to increase 3.1% this year after increasing 3.6% last year. Real consumer spending growth is expected to get a boost to 3.0% by 2017.
5. A huge boost for housing starts
The IHS expects housing starts to surpass a 1.3 million-unit annualized rate by the start of 2017, a whopping 14% annual increase. New home sales are projected to hit the highest levels since 2007.
This is big news for the residential/commercial services franchises as new homes means new demand for professional services.
More promising news on commercial and residential services
Nominal spending on household services like grout and tile cleaning, repair and restoration is projected to rise 4.4% this year after experiencing similar growth in 2015.
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The IHS’s estimates for employment and business output in the commercial and residential services showed stronger than projected growth throughout last year, and analysts expect a similar pace of steady growth this year as well.
Thinking about franchising in an industry poised for big growth over the coming years?
Click here to learn more about The Groutsmith franchise opportunity or contact us today to start a conversation.
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