According to ProcurementIQ estimates, the price of personnel relocation services has grown at an average annual rate of 1.6% from 2014 to 2017. Demand for personnel relocation generally follows overall trends in the broader economy; improvements in the economy boost business growth, encouraging businesses to expand to a greater number of locations. In turn, businesses must typically relocate some employees to facilitate this growth. As demand for relocation services grows, suppliers raise prices.
Several external factors have contributed to the rise in demand for personnel relocation services in the three years to 2017. First, the number of employees in the United States has increased in the past three years, broadening the potential pool of employees for which buyers purchase relocation services. A greater number of employees also signals expansion, which often requires moves for key personnel. In addition, a rise in the house price index has contributed to growing demand because employees have been more willing to relocate because there is little fear that they will lose money on the sale of their homes. Thus, rising house prices have contributed to service price increases.
Corporate profit has trended downward slightly during the period. Nonetheless, a rebounding domestic economy has helped to bolster demand from many business buyers, allowing more businesses to expand and, thus, move their key employees to new offices. Supplier operating costs have also grown, as the moving services procured by operators increase in price. As such, these growing costs are passed on to buyers.
Buyers have been somewhat negatively impacted by rising prices stemming from demand growth, but the slow rate of price growth has not translated into significant declines in buyer power. In fact, the low level of price volatility during the period has ultimately benefited buyers. Namely, low price volatility reduces the likelihood that buyers will face price shocks and allows for more accurate financial planning.
During the three years to 2020, the cost of personnel relocation services is expected to continue growing at a moderate average annual rate of 1.9% as the economy continues to recover and demand for personnel relocation services rises further.
As in recent years, several external forces are expected to continue driving demand in the market through 2020. In particular, the number of employees in the United States is expected to rise in the next three years, expanding the potential pool of employees for which relocation services are purchased. Corporate profit is also expected to rise, which will allow more businesses to expand and relocate employees to new and growing regions. In addition, greater corporate profit will allow buyers to offer attractive relocation packages to prospective employees as a tool for talent acquisition, further incentivizing buyers to utilize market services. Moreover, continued growth in the housing market will further improve employees’ outlook on relocation. In turn, steady demand growth will place upward pressure on the price of personnel relocation services, harming buyer power.
Prices are not expected to be volatile in the next three years, however. In particular, because the recovery of the US economy is projected to provide consistent demand for personnel relocation, the likelihood of price spikes or drops will be negligible. As a result, buyers will be able to accurately budget for purchases. Although slow and stable price growth will help to ensure that buyers do not face drastically higher prices should they choose to postpone making purchasing decisions, contracting services now will help buyers to mitigate forecast price growth.