Stagnation Charts #6: growth in the service industries
In the latest of our occasional series of Stagnation Charts we use today’s release for the Index of Services. The problem isn’t that output in the service industries isn’t growing – it is – but that the rate is much slower than it was before the recession:
If you break these figures down into four large service sectors an interesting picture emerges. Growth in transport, storage and communications is lower than pre-recession but the decline isn’t so disastrous:
There’s much less of a dip during the recession, reflecting the last government’s decision to fight the crisis by stimulating demand. The other really noticeable factor is that growth pre-crisis (Jan 2000 to Dec 2007) in these mainly public sector services (averaging 2.5 per cent) was lower than for distribution, hotels and restaurants (3.2 per cent average), transport, storage and communications (5.1 per cent average) and business services and finance (5.4 per cent average). So much for the last government losing control of public service expenditure.
And it is business services and finance that explain most of the stagnation in overall services: