San Francisco — June 28, 2007 — Increasing numbers of companies are relying on more temporary workers as the labor market continues to tighten, according to data from the recently released Visa Commercial Consumption Expenditure (CCE) Index.
Visa USA today released a detailed analysis revealing key insights into how large and small U.S. businesses are spending their money. The CCE Index for 2006 analyzes government data sources and research methods to provide an assessment of business expenditures.
"While the overall U.S. economy is expected to continue to remain sluggish over the next 12 months, business spending continues to be an important engine of growth," said Wayne Best, senior vice president for business and economic analysis at Visa USA. "The Visa CCE data shows an increase in personnel supply services, which indicates that more companies of all sizes are relying on temporary workers as the labor market continues to tighten."
Best added that robust IT spending of more than $2 trillion points to the fact that more U.S. companies are looking to harness technology to streamline their operations and improve efficiencies. He also pointed to a sharp increase in rent year-over-year points to the continued demand for space to expand businesses even as the economy slows in other areas.
Top Spending Categories
The CCE Index indicates that the top five individual spending categories, representing 54 percent of total spending for all businesses in 2006, were:
Small Business Spending
According to CCE, small business spending grew 4.3 percent in 2006, to $4.88 trillion, with growth expected to remain at 4.3 percent and reach $5.09 trillion in 2007. Small businesses are defined as those with $25 million or less in annual revenues.
Approximately 63 percent of total 2006 small business spending was by companies that fell into five broad industry categories:
The CCE analysis found that spending by midsized companies during 2006 grew by 7.9 percent to $3.50 trillion and was the fastest among all business sectors. Spending growth in this sector is expected to reach $3.61 trillion in 2007, a growth rate of 3.1 percent. Midsized companies are defined as having $25 million to $500 million in annual revenues.
About 73 percent of total 2006 middle market spending was by companies in the following industries:
Large companies represent the largest share of CCE spending at $7.64 trillion, which grew by 7.7 percent in 2006. Spending growth in this sector is expected to be 3.7 percent, reaching $7.91 trillion in 2007. Large companies are defined as having revenues of more than $500 million.
A total of 80 percent of total large market spending was by companies in the following industries:
Government agency expenditures grew at an annual rate of 6.6 percent, to $1.26 trillion, in 2006, according to CCE. Growth in government agency business spending is expected to be 8.1 percent, reaching $1.34 trillion in 2007.
"The Visa CCE findings clearly show that business and government spending is concentrated in a number of key areas — raw materials and manufactured goods, personnel services and rent — and we expect these categories will remain the top spending categories through 2007," said Best. "By shifting more of these significant expenditures to payment card products rather than cash or checks, businesses and governments have the opportunity to potentially better manage their cash flow, while often earning rewards."
More on the CCE
CCE includes all private and public sector commercial spending in the U.S. with the exception of payroll and other select expenditures. CCE utilizes government data sources and research methods similar to the Personal Consumption Expenditure (PCE) index that annually monitors consumer-related spending. By using the same source of measures from the Bureau of Economic Analysis (BEA) and the Census Bureau, including the gross domestic product, CCE offers an unbiased and consistent way to monitor business expenditures in the United States with comparable methodology used for global spending. According to the CCE Index:
Core Business Services includes management consulting, architectural services, engineering services, data processing, and administrative support among others. Maintenance and Operating Supplies includes spending on construction, utilities, telecommunications, advertising, office supplies, computer equipment and maintenance and repair. Capital Equipment is defined as any expenditure on goods with a lifespan of more than five years, including transportation equipment, industrial equipment and machinery. Other Spending includes expenditure on doctors, personal services, consumer rental services, etc.
Visa USA today released a detailed analysis revealing key insights into how large and small U.S. businesses are spending their money. The CCE Index for 2006 analyzes government data sources and research methods to provide an assessment of business expenditures.
"While the overall U.S. economy is expected to continue to remain sluggish over the next 12 months, business spending continues to be an important engine of growth," said Wayne Best, senior vice president for business and economic analysis at Visa USA. "The Visa CCE data shows an increase in personnel supply services, which indicates that more companies of all sizes are relying on temporary workers as the labor market continues to tighten."
Best added that robust IT spending of more than $2 trillion points to the fact that more U.S. companies are looking to harness technology to streamline their operations and improve efficiencies. He also pointed to a sharp increase in rent year-over-year points to the continued demand for space to expand businesses even as the economy slows in other areas.
Top Spending Categories
The CCE Index indicates that the top five individual spending categories, representing 54 percent of total spending for all businesses in 2006, were:
- Raw materials and manufactured goods ($2.58 trillion, up 2.3 percent)
- Information technology-related spending ($2.12 trillion, up 8.8 percent)
- Professional services/consulting ($1.67 trillion, up 5.4 percent)
- Personnel supply services ($1.57 trillion, up 6.5 percent)
- Rent ($1.38 trillion, up 13.8 percent)
Small Business Spending
According to CCE, small business spending grew 4.3 percent in 2006, to $4.88 trillion, with growth expected to remain at 4.3 percent and reach $5.09 trillion in 2007. Small businesses are defined as those with $25 million or less in annual revenues.
|
Spending
Category |
Transaction
Volume (billion) |
%
Share of CCE |
% Increase
over 2005 |
|
Core Business
Services |
$1,683 |
34.5 |
4.5 |
|
Maintenance/Operations |
$1,377 |
28.2 |
2.9 |
|
Raw
Materials/Mfg. Goods |
$807 |
16.5 |
0.9 |
|
Rent |
$471 |
9.6 |
14.3 |
|
Travel/Entertainment |
$105 |
2.2 |
6.1 |
|
Capital
Equipment |
$50 |
1.0 |
4.2 |
|
Other
Spending |
$389 |
8.0 |
5.1 |
|
Total |
$4,881 |
100 |
|
Approximately 63 percent of total 2006 small business spending was by companies that fell into five broad industry categories:
- Retail trade — $955 billion (20 percent)
- Wholesale trade — $646 billion (13 percent)
- Manufacturing — $526 billion (11 percent)
- Real estate/rental/leasing — $486 billion (10 percent)
- Construction — $438 billion (9 percent)
The CCE analysis found that spending by midsized companies during 2006 grew by 7.9 percent to $3.50 trillion and was the fastest among all business sectors. Spending growth in this sector is expected to reach $3.61 trillion in 2007, a growth rate of 3.1 percent. Midsized companies are defined as having $25 million to $500 million in annual revenues.
|
Spending
Category |
Transaction
Volume (billion) |
% Share of
CCE |
% Increase
over 2005 |
|
Core Business Services
|
$1,244 |
35.6 |
6.0 |
|
Maintenance/Operations |
$921 |
26.3 |
4.2 |
|
Rent |
$450 |
12.9 |
9.2 |
|
Raw Materials/Mfg.
Goods |
$370 |
10.6 |
2.5 |
|
Travel/Entertainment |
$65 |
1.9 |
6.6 |
|
Capital
Equipment |
$50 |
1.4 |
16.3 |
|
Other
Spending |
$397 |
11.3 |
7.3 |
|
Total |
$3,497 |
100 |
|
About 73 percent of total 2006 middle market spending was by companies in the following industries:
- Wholesale trade — $731 billion (21 percent)
- Retail trade — $727 billion (21 percent)
- Manufacturing — $695 billion (20 percent)
- Healthcare — $202 billion (6 percent)
- Real estate/rental/leasing — $179 billion (5 percent)
Large companies represent the largest share of CCE spending at $7.64 trillion, which grew by 7.7 percent in 2006. Spending growth in this sector is expected to be 3.7 percent, reaching $7.91 trillion in 2007. Large companies are defined as having revenues of more than $500 million.
|
Spending
Category |
Transaction
Volume (billion) |
% Share of
CCE |
% Increase
over 2005 |
|
Core Business Services
|
$1,244 |
35.6 |
6.0 |
|
Maintenance/Operations |
$921 |
26.3 |
4.2 |
|
Rent |
$450 |
12.9 |
9.2 |
|
Raw Materials/Mfg.
Goods |
$370 |
10.6 |
2.5 |
|
Travel/Entertainment |
$65 |
1.9 |
6.6 |
|
Capital
Equipment |
$50 |
1.4 |
16.3 |
|
Other
Spending |
$397 |
11.3 |
7.3 |
|
Total |
$3,497 |
100 |
|
A total of 80 percent of total large market spending was by companies in the following industries:
- Manufacturing — $1.96 trillion (26 percent)
- Wholesale trade — $1.70 trillion (22 percent)
- Retail trade — $1.25 trillion (16 percent)
- Finance/insurance — $662 billion (9 percent)
- Information — $505 billion (7 percent)
Government agency expenditures grew at an annual rate of 6.6 percent, to $1.26 trillion, in 2006, according to CCE. Growth in government agency business spending is expected to be 8.1 percent, reaching $1.34 trillion in 2007.
|
Spending
Category |
Transaction
Volume (billion) |
% Share of
CCE |
% Increase
over 2005 |
|
Core Business
Services |
$2,965 |
38.8 |
5.7 |
|
Maintenance/Operations |
$2,427 |
31.8 |
7.3 |
|
Raw Materials/Mfg.
Goods |
$1,229 |
16.1 |
2.6 |
|
Rent |
$362 |
4.7 |
16.8 |
|
Travel/Entertainment |
$164 |
2.2 |
7.2 |
|
Capital
Equipment |
$91 |
1.2 |
16.7 |
|
Other
Spending |
$398 |
5.2 |
5.8 |
|
Total |
$7,636 |
100 |
|
"The Visa CCE findings clearly show that business and government spending is concentrated in a number of key areas — raw materials and manufactured goods, personnel services and rent — and we expect these categories will remain the top spending categories through 2007," said Best. "By shifting more of these significant expenditures to payment card products rather than cash or checks, businesses and governments have the opportunity to potentially better manage their cash flow, while often earning rewards."
More on the CCE
CCE includes all private and public sector commercial spending in the U.S. with the exception of payroll and other select expenditures. CCE utilizes government data sources and research methods similar to the Personal Consumption Expenditure (PCE) index that annually monitors consumer-related spending. By using the same source of measures from the Bureau of Economic Analysis (BEA) and the Census Bureau, including the gross domestic product, CCE offers an unbiased and consistent way to monitor business expenditures in the United States with comparable methodology used for global spending. According to the CCE Index:
Core Business Services includes management consulting, architectural services, engineering services, data processing, and administrative support among others. Maintenance and Operating Supplies includes spending on construction, utilities, telecommunications, advertising, office supplies, computer equipment and maintenance and repair. Capital Equipment is defined as any expenditure on goods with a lifespan of more than five years, including transportation equipment, industrial equipment and machinery. Other Spending includes expenditure on doctors, personal services, consumer rental services, etc.
