The Impact of Service Sector in American Economy
The U.S service sector is facing growth in recent months and in December it registered its three month high which is more than anticipated value even with employment dip in previous months. The economy of world countries in 21st century highly depends on the growth of service sector of their country. It is not only developing the economy, every individual growth is depends on service sector. According to the Reuters industry report the service sector index of U.S rose to 59.3 in November which was 57.1 in October and the value is more than economist’s prediction by 1.6 for the month of November indicates the favourable situation for service sectors in U.S.
Contribution of service sector to U.S economy
The sector which holds more than three-quarter share in GDP is fluctuating throughout the year. It has faced its highest rating of 59.6 in the midst of 2014 and faced a slight down in the following months due to labour market tightening and less demand from Eurozone and Asia but again started to expand in November due to good performance of key service sectors. After the surge in November, economists said that the growth of domestic service sector is not affected by the global economy and it is also attractive when compared with Japan and Eurozone which are threatening by possible recession in near future. The demand aroused for domestic sectors make the companies to hire labours at brisk pace and these labour tightening measures will enhance the Federal Reserve to maintain their low interest rate policy for another extended period. The enrolment is mainly on Private sector according to Payrolls processor ADP which further added that the private sector employment is rising more than 200,000 continuously for 10 months up to November and this rise increase the wages. With this effect the hourly wages also seen a growth of 0.4%, the value twice than the estimated. the only sector which is not experienced considerable employment growth is communication industry. The paradox lies in communication sector is that yields higher revenue than manufacturing sector with workforce less than manufacturing sector. Even for the last 10 months many industries including few service sectors also hired new employees at the rate in double digit but the communication sector experienced single digit employment growth. Apart from communication other service sectors are growing along with increasing employees. The New Jersey Electrical contractor claimed that the recovery of economy along with inflation under 2% and higher wage growth are responsible for increase in purchasing power which in turn increases spending in house hold services, retail service, education services and entertainment services.
Another good year for America
China is experiencing its worst growth slowdown since 1990 and japan is faltering again on the east. Islamic countries are struggling to form a stabilized government and America is the only best place which has performed well in 2014 and it is expected a better and balanced growth in next year. The horizontal drilling in America will yield better crude oil supply in domestic market which is expected to reduce the trade deficit. It will cause another dip in global oil price and it ensures America will be the lowest energy market in future. It also enhance the energy and consumer sector and controls the inflation and unemployment. it clearly shows that America is on recovery track and the future of manufacturing and services is safe for anther decade.