2017 4th Quarter International Trade Council Global Business Confidence Survey

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GLOBAL BUSINESS CONFIDENCE REPORT 4 th Qtr. 2017 Responses by Sector Manufacturer 27.18% Wholesaler 7.58% Service Provider 54.65% Retailer 8.94% Industry Association / Chamber / Trade Body 1.65% 72.82% of all responses received were from organizations whose primary activity was related to the provision of services (This figure includes wholesale, retail and industry associations/chambers/trade bodies). This is unsurprising given that the bulk of all respondents (66.37%) are located in the highly developed nations of the United States of America (40.44%), Canada (9.59%), the United Kingdom (8.35%) and Australia (7.99%). The service sector has been both the largest and the fastest growing component of each of these countries respective economies for the past 20 years and account for (approximately) 79.6% of GDP in the United States of America 1 , 79% of GDP in the United Kingdom 2 , 71% of GDP in Canada 3 and 70% of GDP in Australia 4 . The Relevance of the Service Sector Services are being increasingly recognized as important levers for growth and development of stable economies yet, despite its dominance, the sector is not well understood. The World Development Indicators show that the services sector accounts for almost 71% of global GDP and is expanding more rapidly than organizations in the manufacturing sector 5 . One reason for the growth of the service sector is that, as automation and other efficiencies in manufacturing and agricultural production grows, the number of jobs declines. Relative to manufacturing, services tend to be more labor intensive; therefor expanding the sector can contribute significantly to employment and growth. Certain services are key inputs into almost all other modern-day activities. These include energy transmission, finance, telecommunications, transportation, legal and accountancy services. Other service sectors such as the health, education, water and sanitation sectors are directly relevant to achieving social development objectives. Knowledge intensive services are not only carriers of specialized knowledge; they are also connectors, technology transfer agents and problem solvers. 1 "U.S. Economy at a Glance". Bureau of Economic Analysis, U.S. Department of Commerce. Retrieved 9 October 2017. 2 "Five facts about the UK service sector". Office for National Statistics. 29 September 2016. Retrieved 9 October 2017. 3 "Gross domestic product at basic prices, by industry". Statistics Canada. Retrieved 9 October 2017. 4 "The importance of services trade to Australia". Australian Government Department of Foreign Affairs and Trade. Retrieved 9 October 2017. 5 "Global importance of services". United Nations Conference on Trade and Development. Retrieved 9 October 2017. International Trade Council www.tradecouncil.org Page 16
GLOBAL BUSINESS CONFIDENCE REPORT 4 th Qtr. 2017 Services are the fastest growing component of international trade. Trade in services is far broader than cross-border exchanges (that is, the way goods are mainly traded). It can involve the establishment of a commercial presence abroad, the movement of consumers (for example: tourism), or the temporary movement of workers (for example: consulting services) 6 . The quantitative expansion of the service sector does not, however, in and of itself guarantee that services will become an engine of growth for many economies 7 , particularly where investment is still required to stabilize and enhance physical infrastructure. For the sector to play that role it must provide a route to greater efficiencies, more productivity and innovation 8 . Service Sector Diversity Accommodation 3.03% Food 0.87% Paper and allied industry 0.11% Accounting & audit 2.28% Furniture and fixtures 0.11% Petroleum and coal 0.65% Aerospace 0.65% Gifts / giftware 0.33% Printing 0.76% Industrial machinery and Architectural design 2.06% equipment 1.19% Publishing 0.54% Automotive 1.84% Information technology 5.85% Quality inspection / control 0.33% Beverages 0.22% Instruments 0.11% Real estate 5.09% Carpentry, cabinet making etc 0.22% Insurance 1.84% Renewable energy 0.98% Chemicals 0.22% Leather 0.11% Retail - mixed 0.65% Clothing / apparel and other textiles 0.33% Legal 2.38% Security 1.41% Construction 8.34% Lighting 0.11% Social welfare 1.52% Consulting services - general 10.51% Manufacturing - mixed 0.65% Telecommunications 0.65% Education 4.66% Marketing and public relations 2.49% Textiles 0.11% Engineering 3.58% Media 1.63% Translation and localization 0.54% Entertainment 1.52% Medical 4.44% Transportation 6.61% Fabricated metals 0.11% Metal products 0.22% Wholesale - mixed 0.22% Finance & investment 1.63% Mining and minerals 0.11% Other 16.25% Excluding retailers, wholesalers and industry associations / charitable organizations, the service sector accounts for 54.65% of all respondents from a broad spectrum of industries with many service professionals (10.51%) operating across a range of industries. The analytical challenge created by the diversity of the service sector appears where services are highly regulated or otherwise insulated from competition in certain economies (i.e. energy or education). This is reflected in the lack of respondents from industries which are predominantly state owned. Changes in the Service Sector The service sector is going through revolutionary change which is dramatically affecting the way in which we live and work. New services are continually being launched to satisfy our existing needs and to meet needs that we did not even know we had. Seven years ago, when the first on-demand ride-sharing systems were created, few people likely anticipated the affect it would have on traditional transport operators yet, today, many people now feel they can’t do without them. Similar transformations are occurring across virtually all service sector industries. 6 McLachlan, Rosalie; Clark, Colin; Monday, Ian (2012). "Australia's Service Sector: A Study in Diversity". Australian Government Productivity Commission. 7 Leech, Link, Scott & Reed (January 1998). "The Economics of a Technology-Based Service Sector". National Institute of Standards & Technology Program Office Strategic Planning and Economic Analysis. 8 Setboonsarng,Sununtar (2015). "Infrastructure and Poverty Reduction". Asian Development Bank. International Trade Council www.tradecouncil.org Page 17
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2017 4th Quarter International Trade Council Global Business Confidence Survey

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