IHS Global Insight's published a report regarding the forecast of the franchise sector of the U.S. economy in 2012 for the International Franchise Association Educational Foundation.
A series of positive economic reports recently – most notably employment reports showing jobs growth of over 200,000 in each of the last three months – have raised hopes that an acceleration of growth may be underway. However, negative factors that could restrain this rebound remain. The price of oil – and gasoline prices – have risen sharply, and this will create a drag on consumer demand, offsetting some of the benefits of faster job growth. As we projected at the time of our December 2011 forecast report, real GDP growth is slowing in the first quarter – largely due to the fact that the change in inventories will be roughly neutral for growth, after adding 1.9 percentage points to the fourth quarter. Nonetheless, our forecast for full-year growth in 2012 – at 2.1 percent – is up slightly from the 1.9 percent growth projected in our December forecast.
Although employment growth has picked up and prospects have brightened for some industries, there has been nothing to alter the basic pattern of IHS Global Insight's industry forecast since the December 2011 report for IFA. The uncertainty created in the global economy by Eurozone debt problems has abated, but much of Europe is in recession and growth is slowing in China – hindering any export-led expansion in the United States. Businesses have begun to expand their labor force after dramatic cuts during the recession, but output growth has not kept pace with recent hiring and productivity growth is lagging.
IHS Global Insight continues to envision modest growth of business formation in 2012. Expected growth of the number of franchise establishments in 2012 (at 1.6 percent) is also slightly lower, but remains in line with the economy-wide growth rate. The forecasts of other major indicators of franchise business activity show little change. The data show how the franchise economy (and the U.S. economy in general) follows the path of growth and recovery after an economic slowdown.
According to tha data of the report, on average, output per employee in franchise businesses is estimated to be $93,459 per worker in 2011 and forecast to grow to $96,193 in 2012. This output-per-worker ratio varies within the 10 franchise business lines from a low of $55,614 (Table/Full Service Restaurants) to a high of $204,031 (Automotive) in 2011.