A cyclical industry is particularly dependent on business cycles. It is especially sensitive to changes in interest rates, as well as to changes in other aspects of a country’s economy.
Cyclical products are usually not consumable or have a relatively long lifespan. Examples of these are automobiles, steel products, heavy equipment, and construction equipment. Since these items are not perishable, consumers are more likely to defer their purchase during times of economic difficulty.
Once economic conditions improve, it is easier for businesses and other consumers to make such purchases, leading to an improvement in the performance of these industries.
The performance of such industries may also be dependent on seasonal changes in demand. The performance of the airline industry, for instance, changes depending on whether it is a good time for traveling or not. During summer and holidays, people are more likely to go on long trips than they are during the busier months. However, this is also dependent on the state of the economy and the spending power of individuals.
During times of economic contraction, individuals are more likely to go on shorter trips and avoid the high cost of air travel. Therefore, the ideal period for cyclical industries when the economy is strong and people have access to disposable income.
