Large enterprises spent $7.2 trillion, rising 9.8 percent over 2004, Visa expenditure index shows
San Francisco — February 10, 2006 — Estimated commercial spending in the United States rose to $16.3 trillion in 2005, up from $15.06 trillion in 2004, an increase of 8.2 percent, according to the Commercial Consumption Expenditure (CCE) Index produced by Visa USA.
The CCE analysis segments spending by four primary business sectors: small business at $4.7 trillion (29 percent), midsize companies at $3.3 trillion (20 percent), large companies at $7.2 trillion (44 percent), and government agency spending at $1.1 trillion (7 percent).
Forecast estimates derived from the CCE analysis project that commercial spending will reach $17.4 trillion in 2006 and $17.9 trillion by 2007.
"We are encouraged to see that commercial spending remained strong in 2005, and we expect moderate spending growth to continue through 2007 and beyond," said Wayne Best, senior vice president and chief economist for Visa USA. "While 2007 will likely see spending growth slow in some sectors, such as construction, we expect overall commercial spending this year to increase by approximately 6 percent."
Large Company Spending
Large companies represent the largest share of estimated CCE spending at $7.2 trillion, 9.8 percent growth over 2004. Spending growth in this sector is expected to be 8.1 percent and reach $7.8 trillion in 2006. Estimates for 2005 indicate that 50 percent of large-market company spending was in the following top five expenditure categories:
CCE analyzed estimated spending by midsize companies for the first time in 2005 and found that it grew the fastest among all business sectors at 10.5 percent, to $3.3 trillion, with growth expected to moderate to 8.4 percent and reach $3.6 trillion in 2006. Estimates for 2005 indicate that 59 percent of commercial spending by mid-market companies was in the following top five expenditure categories:
According to CCE estimates, small business spending grew 5.4 percent in 2005 to $4.7 trillion, with growth expected to slow slightly to 4.3 percent and reach $4.9 trillion in 2006. Estimates for 2005 indicate that more than half (54 percent) of small business spending was in the following top five expenditure categories:
The smallest segment of CCE, at $1.1 trillion in estimated spending for 2005, government agency expenditures also grew at the slowest annual rate among the business sectors at 4.2 percent. Growth in government spending is expected to be 3.9 percent and reach $1.2 trillion in 2006. Estimates for 2005 indicate that nearly half (46 percent) of government spending was for the following top five expenditures:
According to Visa, by using the same source of measures from the Bureau of Economic Analysis (BEA) and the Census Bureau, in addition to proprietary data analysis provided by Global Insight (USA) Inc., CCE offers an unbiased and consistent way to monitor business expenditures in the United States with comparable methodology used for global spending. The CCE index defines small businesses as those with $25 million or less in annual revenues, midsize companies are defined as $25-$500 million in annual revenues and large companies are defined as those with annual revenues over $500 million.
"The CCE Index and the segmentation analysis of commercial spending provides valuable information to Visa member financial institutions and helps them better serve their commercial and small business clients," said Darren Parslow, division head of Visa Commercial Solutions.
Additional Articles of Interest
— Electronic invoice presentment and payment failed to meet its initial predictions. However, recent studies have uncovered a renaissance of interest in Web Invoicing & Electronic Payments solutions as organizations shift their emphasis toward cost containment and productivity enhancement. Read more in "The Analyst Corner: Payment," in the October/November 2005 issue of Supply and Demand Chain Executive.
— P-cards continue to advance, and e-payables solutions are making headway, but the convergence of the financial and physical supply chains is still a work in progress. Read more in "Enabling the Financial Supply and Demand Chain," in the April/May 2005 issue of Supply & Demand Chain Executive.
San Francisco — February 10, 2006 — Estimated commercial spending in the United States rose to $16.3 trillion in 2005, up from $15.06 trillion in 2004, an increase of 8.2 percent, according to the Commercial Consumption Expenditure (CCE) Index produced by Visa USA.
The CCE analysis segments spending by four primary business sectors: small business at $4.7 trillion (29 percent), midsize companies at $3.3 trillion (20 percent), large companies at $7.2 trillion (44 percent), and government agency spending at $1.1 trillion (7 percent).
Forecast estimates derived from the CCE analysis project that commercial spending will reach $17.4 trillion in 2006 and $17.9 trillion by 2007.
"We are encouraged to see that commercial spending remained strong in 2005, and we expect moderate spending growth to continue through 2007 and beyond," said Wayne Best, senior vice president and chief economist for Visa USA. "While 2007 will likely see spending growth slow in some sectors, such as construction, we expect overall commercial spending this year to increase by approximately 6 percent."
Large Company Spending
Large companies represent the largest share of estimated CCE spending at $7.2 trillion, 9.8 percent growth over 2004. Spending growth in this sector is expected to be 8.1 percent and reach $7.8 trillion in 2006. Estimates for 2005 indicate that 50 percent of large-market company spending was in the following top five expenditure categories:
- Raw materials/manufactured goods - $1.20 trillion (17 percent)
- Other core business services - $829 billion (11 percent)
- Professional services - $562 billion (8 percent)
- Personnel supply services - $525 billion (7 percent)
- Insurance - $496 billion (7percent)
- Manufacturing - $1.95 trillion (27 percent)
- Wholesale trade - $1.62 trillion (23 percent)
- Retail trade - $1.18 trillion (16 percent)
- Finance/insurance - $555 billion (8 percent)
- Information - $473 billion (6 percent)
CCE analyzed estimated spending by midsize companies for the first time in 2005 and found that it grew the fastest among all business sectors at 10.5 percent, to $3.3 trillion, with growth expected to moderate to 8.4 percent and reach $3.6 trillion in 2006. Estimates for 2005 indicate that 59 percent of commercial spending by mid-market companies was in the following top five expenditure categories:
- Personnel supply services - $450 billion (14 percent)
- Rent - $385 billion (12 percent)
- Other business spending - $376 billion (11percent)
- Professional services - $374 billion (11 percent)
- Raw materials/manufactured goods - $361 billion (11 percent)
- Wholesale trade - $686 billion (21 percent)
- Manufacturing - $683 billion (21 percent)
- Retail trade - $679 billion (20 percent)
- Healthcare - $199 billion (6 percent)
- Construction - $162 billion (5 percent)
According to CCE estimates, small business spending grew 5.4 percent in 2005 to $4.7 trillion, with growth expected to slow slightly to 4.3 percent and reach $4.9 trillion in 2006. Estimates for 2005 indicate that more than half (54 percent) of small business spending was in the following top five expenditure categories:
- Professional services - $541 billion (11 percent)
- Rent - $412 billion (9 percent)
- Personnel supply services - $404 billion (9 percent)
- Other business spending - $370 billion (8 percent)
- Retail trade - $913 billion (20 percent)
- Wholesale trade - $621 billion (13 percent)
- Manufacturing - $530 billion (11 percent)
- < Construction - $419 billion (9 percent)/LI>
- Real estate/rental/leasing - $412 billion (9 percent)
The smallest segment of CCE, at $1.1 trillion in estimated spending for 2005, government agency expenditures also grew at the slowest annual rate among the business sectors at 4.2 percent. Growth in government spending is expected to be 3.9 percent and reach $1.2 trillion in 2006. Estimates for 2005 indicate that nearly half (46 percent) of government spending was for the following top five expenditures:
- Raw materials/manufactured goods - $168 billion (15 percent)
- Professional services - $105 billion (10 percent)
- Personnel supply services - $98 billion (9 percent)
- Other core business services - $82 billion (7 percent)
- Computers/office equipment - $80 billion (7 percent)
According to Visa, by using the same source of measures from the Bureau of Economic Analysis (BEA) and the Census Bureau, in addition to proprietary data analysis provided by Global Insight (USA) Inc., CCE offers an unbiased and consistent way to monitor business expenditures in the United States with comparable methodology used for global spending. The CCE index defines small businesses as those with $25 million or less in annual revenues, midsize companies are defined as $25-$500 million in annual revenues and large companies are defined as those with annual revenues over $500 million.
"The CCE Index and the segmentation analysis of commercial spending provides valuable information to Visa member financial institutions and helps them better serve their commercial and small business clients," said Darren Parslow, division head of Visa Commercial Solutions.
Additional Articles of Interest
— Electronic invoice presentment and payment failed to meet its initial predictions. However, recent studies have uncovered a renaissance of interest in Web Invoicing & Electronic Payments solutions as organizations shift their emphasis toward cost containment and productivity enhancement. Read more in "The Analyst Corner: Payment," in the October/November 2005 issue of Supply and Demand Chain Executive.
— P-cards continue to advance, and e-payables solutions are making headway, but the convergence of the financial and physical supply chains is still a work in progress. Read more in "Enabling the Financial Supply and Demand Chain," in the April/May 2005 issue of Supply & Demand Chain Executive.
- More articles about Visa Commercial Solutions.
