A global pandemic is a scenario that few big corporations have plans for, let alone small businesses. The emergence of COVID-19 has affected nearly every industry worldwide. All businesses have been forced to pivot, adapt, and at times, completely reinvent their operations to survive. Looking at data from tens of thousands of Home Service professionals, Jobber’s Home Service Economic Report: Spring Edition sheds light into how segments such as Contracting, which includes the HVAC industry, have proven resilient in the face of hardship.
Reflecting on trends observed over the past six months, the data reveals that Contracting and the Home Service category as a whole are on a strong path to recovery, and rebounding to pre-pandemic growth levels. To understand where we are heading, let’s explore some key findings in more detail to help HVAC businesses make better informed decisions.
Marginal Economic Dip Amid Peak COVID-19 Months
With very few exceptions, almost every Home Service industry felt the economic impact of COVID-19; some more severely than others.Data reveals that the Home Service category was far less impacted by the pandemic compared to other categories April was the hardest hit month according to nearly all indicators across all categories. Timed with widespread stay-at-home orders and a significant drop in consumer demand, median revenue for Home Service businesses decreased by 15% year-over-year.
Despite these challenges, data reveals that the Home Service category was far less impacted by the pandemic compared to other categories such as Clothing Stores, which saw a year-over-year revenue decline of 87%, and Restaurants, which saw a revenue decline of 53%. While the Contracting segment, which includes industries such as construction, electrical, and plumbing, in addition to HVAC, did see a 15% decline in April revenue; it remained relatively stable compared to others, proving to be resilient to economic downturns even during a historic crisis.
New Work Scheduled Reaches a High Point
The stable and meaningful nature of Home Service work helped maintain and provide jobs to millions of Americans throughout this time, all while delivering comfort and safety to their communities. New work scheduled for Home Service businesses reached a record high in JuneWhile unemployment shot to a record high of 14.7% in April (largely due to the pandemic), the Home Service category was relatively less impacted, and recovered much quicker than others. Several industries within this category, including HVAC, were designated as essential throughout the country, allowing many of these businesses to continue operating even as others were forced to close.
In June, new work scheduled for Home Service businesses reached a record high for the year with an increase of 15% year-over-year. The Contracting segment, which was seeing new work growth of around 2% year-over-year before the pandemic hit, actually hit a record high of 14% growth in June. As new work scheduled continues to look optimistic, Contracting enters Q3 with a positive start.
Rebuilding Revenues to Pre-Pandemic Growth
Prior to the pandemic, the Contracting segment was seeing industry-average revenue growth. However, the steep decline in new work being scheduled when the stay-at-home There has also been more disposable income available to many that have started working from homeorders came into effect impacted revenues and caused a decline of roughly 25% below expectations. This quickly changed as homeowners spent more time at home than ever, making them more inclined to take money set aside for travel and invest in home projects they’ve been putting off. There has also been more disposable income available to many that have started working from home, and are spending less money than usual due to lesser commuting to work and lesser dining out, if at all.
In just two months, the Contracting segment saw a turnaround in revenue, from -15% year-of-year growth in April and May to 10% in June. With the upswing momentum of new work scheduled in this segment, Contacting is well-positioned to see continued revenue growth entering Q3. It’s impressive to see contracting businesses overall return to pre-COVID levels so quickly.
The first half of 2020 has really shown the resilience and resourcefulness of small businesses in the Home Service category. Although many businesses have suffered tragic losses, others have survived this crisis quite well, and have started getting back to their pre-lockdown performance levels. Although we have not yet seen the full impact that the COVID-19 pandemic will have on small businesses, there is hope for HVAC entrepreneurs that industry growth will continue to increase during the third quarter and beyond.
