Written by Swapnil Devre
Industry trends are constantly changing. The service-based industry has seen some interesting changes in the past few years that will continue to shape the market for years to come. We’ll take a look at what these changes are, and how they’re affecting both consumers and businesses alike.
#The service-based industry is the fastest-growing sector in the US
In the US, the service industry is the fastest-growing sector. A report by the US Bureau of Labor Statistics has projected that every year, more than 300,000 new jobs will be created in this sector with an average growth rate of 20% until the end of 2022.
One of the most important drivers for this trend is increasing demand from millennials who are looking to have a higher quality work-life balance which can be offered through services rather than traditional manufacturing or knowledge-based economy sectors. This phenomenon has been termed as “Gig Economy” where people do not hold long-term employment but instead offer high-value skills on a project basis and move between tasks depending upon short-term needs, allowing them to focus their energy on what they love doing best.
#The service-based industry has been on a steady rise for decades, from 32% of GDP in 1950 to 76.89% today
As per a report by McKinsey, the service sector has been growing at a CAGR of about 11% from 1950 to 2015.
In terms of GDP share as well, it went up from only around 32% in 1950 to over 50% now. Industries like consulting and accounting which are based on services have shown exponential growth rates while sectors such as transport & logistics (which rely upon physical assets) have actually seen less than expected demand during this period.
Even though there is no dearth of jobs today due to higher levels of automation, many people still prefer working in their “passion areas” rather than pursuing something they do not enjoy doing or might be good at it but do not offer any personal satisfaction.
#The top 5 industries by revenue are healthcare, retail trade, finance and insurance, professional and technical services, and wholesale trade
The top five industries by GDP are:
- Professional and technical services
- Health care
- Wholesale trade
The most common occupations in the service-based industry include retail salespersons, cashiers, secretaries, and administrative assistants, except legal, medical, and executive; accountants and auditors; transportation ticket agents or travel clerks; waiters or waitresses.
Many of these jobs require only a high school diploma plus on-the-job training while some will need a two-year degree.
#Healthcare is currently at $6 trillion per year with an expected growth rate of 4-5% annually
The size of the healthcare industry has exploded in recent years.
As of 2017, this makes it larger than any other economic sector at $19 trillion per year worldwide and will continue to grow by about five percent annually in the future. It is also expected that combined with social assistance services, customer banking value-added service industries, online entertainment, and real estate sectors are all included within this trend as well.
The statistical data includes direct revenue generated from activities along with indirect revenues generated through investments associated with these industries listed above.
#Retail trade is expected to make up 8% of GDP with a growth rate of 3-4%
Retail trade is only expected to grow by a rate of about 50% during the next decade.
The industry is expected to account for 12% in 2025 and 30-40 % by 2050.
Industry trends show that online retail sales have increased from just 0.75 percent back in 2000, but this number has skyrocketed up to over 13 percent as of last year. This growth shows no sign of slowing down either! Companies like Amazon are continuously expanding their empire further into all aspects of our daily lives including groceries, clothes & even music streaming services! It’s pretty clear where things are going.
Online shopping will continue to become more popular with each passing day because it saves consumers time and money along with being able to shop from anywhere anytime which is an advantage many will continue to value.
#Professional and technical services are projected to grow by over 10%, making it one of the fastest-growing sectors in America
Professional and technical services is a broad sector. It includes jobs ranging from computer systems design to management consulting, medical laboratories, video production studios, and more.
A new report from the U.S Bureau of Labor Statistics predicts that this industry will grow by over 11% between 2016-2026.
This is a much higher growth rate than other business sectors. For example, the construction industry will only grow by about two percent over that period and manufacturing by less than one percent.
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