Encompassing all economic activity other than agriculture, mining, and manufacturing, the service sector is by far the largest component of the U.S. economy. Four out of every five private sector non-farm jobs are in the economy's service sector -- 78 million in 1995.
Service sector jobs come from an enormous range of industries, including banking and insurance, travel, entertainment, wholesale and retail trade, legal and other business services, information, telecommunications, health care, education, transportation, energy and environmental services, and architectural, construction and engineering services.
According to a recent Commerce Department study, exports of services by U.S. firms in these and other industries supported 3.4 million U.S. jobs in 1992.
In addition to providing millions of job opportunities in communities both large and small, the service sector contributes significantly to U.S. technological leadership and enhances the global competitiveness of all U.S. firms, including those in the manufacturing sector.
U.S. services are highly competitive in world markets, and the United States is the world's premier services exporter. In 1993, U.S. services exports accounted for 17 percent of global services exports; our closest competitors that year were France (10 percent), Germany (7 percent), Italy (6 percent), and Japan and the United Kingdom (5 percent each).
Despite relatively open access to U.S. markets, the United States recorded a $60 billion surplus on services trade in 1994 on sales of $186 billion, a surplus that offset 36 percent of the U.S. merchandise trade deficit. U.S. service exports have more than doubled over the last seven years, increasing $100 billion since 1987, and $51 billion just since 1990.
Major markets for U.S. exports include the European Union ($55 billion in 1994 exports), Japan ($30 billion), and Canada ($17 billion). Within the European Union, the three largest markets for U.S. exports are the United Kingdom ($17 billion in 1994 exports), Germany ($12 billion), and France ($7 billion).
At $9 billion, Mexico is presently the largest of the emerging markets for U.S. services exports. Notably, a number of emerging markets imported over $1 billion in U.S. services in 1994 -- namely, Argentina, Brazil, China, Hong Kong, India, Korea, the Philippines, Singapore, Taiwan, and Thailand.
Table 1. Top Ten U.S. Services Exports, 1994
(millions of dollars)
Travel*................................................. $60,406
Transportation*......................................... $43,555
Freight Services ($9,836)
Passenger Fares ($17,477)
Port Services ($15,213)
Other Transportation Services ($1,029)
Commercial, Professional, and Technical Services........ $10,115
Accounting, Auditing,
and Bookkeeping Services ($142)
Advertising Services ($399)
Construction, Engineering,
Architectural, and Mining Services ($2,704)
Franchising Fees ($458)
Industrial Engineering Services ($235)
and Industrial Processes ($2,964)
Legal Services ($1,558)
Mailing, Reproduction, and Commercial
Art Services ($14)
Management, Consulting, and Public
Relations Services ($986)
Personnel Supply Services ($118)
Research, Development, and
Testing Services ($537)
Financial Services.................................... $8,602
Financial Services ($6,962)
Insurance (Premiums Received Net
of Losses Paid)* ($1,640)
Education and Training Services......................... $7,510
Education ($7,140)
Training Services ($370)
Entertainment Services.................................. $3,969
Books, Records, and Tapes ($307)
Broadcasting and Recording of Live
Events ($153)
Film and Tape Rentals* ($3,448)
Sports and Performing Arts ($61)
Equipment Installation, Maintenance, and Repair Services. $3,394
Information Services.................................... $3,369
Computer and Data Processing
Services ($2,546)
Database and Other Information
Services ($823)
Telecommunications Services............................. $2,757
Health Care Services.................................... $812
Management of Health Care Facilities ($18)
Medical Services ($794)
Other Services (including affiliated sales for
most categories above)*............................... $40,930
U.S. Private Services Exports, Total*................... $185,419
*The values reported above exclude the value of affiliated
(intra-firm) sales except for categories marked with an asterisk.
By definition, the services exports data above also exclude the
value of sales by foreign affiliates, which are often a very
important channel for U.S. firms marketing their services abroad.
(For information on affiliates' sales, see Tables 2 and 3.)
In addition to data on U.S. services exports, the Department of Commerce collects information on the sale of services by majority-owned foreign affiliates of U.S. corporations (MOFAs). In 1993 (the most recent year in its annual Survey of Current Business, which excludes sales by affiliates in the banking sector), U.S. non-bank MOFAs' sales of services to foreign persons totaled $143 billion, only $31 billion less than U.S. services exports in 1993.
Because sales by U.S. MOFAs occur as transactions between foreign residents rather than as transactions between U.S. and foreign residents, such sales are not recorded as exports. However, many services require a local presence in a market in order for a firm to sell its services there; thus, affiliates' sales are an important part of the overall picture of foreign sales of services by U.S. firms.
U.S. services exports data and comparable data for sales of services by MOFAs cannot be tabulated for all categories. For example, affiliates in wholesale trade accounted for 11 percent of total 1993 MOFAs' sales of services, but because wholesalers' services are recorded in the international trade accounts as part of the value of U.S. merchandise exports, there is no corresponding category for wholesalers' services exports. Where similar categories exist, however, affiliates often account for greater sales volume than exports.
Table 2. U.S. Services Exports and Sales
of Services by U.S. MOFAs, 1993
(millions of dollars)
U.S. Services Exports Sales of Services by U.S. MOFAs
(see Table 1 for components (by industry of affiliate)
of categories)
Travel $57,875 Hotels and Other Lodging
Places $1,943
Transportation $40,594 Transportation $6,751
Financial Services* $11,455 Insurance $27,602
Commercial, Commercial, Professional
Professional, and Technical $15,209
and Technical $9,228 Accounting, Research,
Management, and Related
Services ($5,277),
Advertising ($3,544),
Construction ($198),
Engineering, Architecture,
and Surveying ($5,827),
Mining ($363)
Education and Education and Training N.A.
Training $7,049
Entertainment $3,616 Motion Pictures, including
TV Tape and Film $5,886
Information Computer and Data
Services $3,000 Processing $12,867
Installation, Maintenance, Manufacturing $17,375
and Repair $2,990
Telecommunications $2,784 Communications $2,633
Health Care Services $770 Health Services $381
1993 Total (all 1993 Total (all
categories) $174,207 categories) $143,113
*In this table, under services exports, data for insurance
premiums received are used rather than premiums net of losses
paid.
Other industries with substantial foreign sales of services via affiliates include wholesale trade ($15.4 billion in 1993), petroleum ($8.2 billion) and public utilities ($3.6 billion). In 1993, U.S. MOFAs located in Europe sold $79.5 billion in services (56 percent of the 1993 total), with MOFAs located in the United Kingdom accounting for $29.0 billion of this amount; MOFAs located in Canada sold $18.4 billion in services (13 percent); and those in Japan sold $15.8 billion in services (11 percent). Sales of services to foreign residents by MOFAs located in Canada, Latin America and other Western Hemisphere markets totaled $28.1 billion, 20 percent of the 1993 total.
See Tables 1 and 2 for the component services exports and MOFAs'
sales categories included here.
Table 3. Private U.S. Services Exports Plus Sales
of Services by U.S. Non-bank MOFAs, 1993
(billions of dollars)
Total $317.3
Travel $59.8
Transportation Services $47.3
Financial Services $39.1
Commercial, Professional, and Technical Services $24.4
Equipment Installation, Maintenance, and Repair Serv. $20.4
Wholesaling and Retailing $16.1
Information Services $15.9
Entertainment Services $9.5
Education and Training Services $7.0
Telecommunications $5.4
Health Care Services $1.2
Selected Regional and Country Markets:
Europe $143.2
European Union $125.3
France $17.2
Germany $23.1
Italy $9.3
Netherlands $11.9
United Kingdom $46.5
Western Hemisphere $73.9
North America $46.1
Canada $36.2
Mexico $9.9
Other Western Hemisphere $27.8
Asia and Pacific $82.8
Australia $7.7
Japan $42.7
Travel 19,577 20,500 10,544 9,805
Passenger Fares 5,877 4,479 5,386 1,735
Other Transportation 9,415 5,532 3,240 7,891
Royalties and License
Fees 11,888 2,344 4,526 3,678
Financial Services* 2,883 1,609 333 1,537
Insurance (Premiums) 1,690 1,967 909 823
Education* 1,121 1,174 696 4,209
Telecommunications* 867 906 196 788
Business, Professional,
and Technical* 4,812 3,245 1,589 5,167
Other services 8,609 5,746 2,291 5,765
Total (all categories) 66,739 47,502 29,710 41,398
Regions' Shares of U.S. Exports, 1994
Western
Europe Hemisphere Japan Other
Travel 32% 34% 17% 16%
Passenger Fares 34% 26% 31% 10%
Other Transportation 36% 21% 12% 30%
Royalties and License Fees 53% 10% 20% 16%
Financial Services 41% 32% 5% 22%
Insurance (premiums) 31% 37% 17% 15%
Education 16% 16% 10% 59%
Telecommunications 31% 33% 7% 29%
Business, Professional,
and Technical 32% 22% 11% 35%
Total (all categories) 36% 26% 16% 22%
Percent Increase, 1987-1994
Western
Europe Hemisphere Japan Other
Travel 157% 123% 1828% 53%
Passenger Fares 113% 135% 1678% -14%
Other Transportation 85% 52% 23% 32%
Royalties and License Fees 112% 121% 132% 184%
Financial Services 62% 88% -38% 179%
Insurance (premiums) 45% -1% -27% 88%
Education 142% 66% 282% 68%
Telecommunications 14% N.A. 23% N.A.
Business, Professional,
and Technical 391% 189% 244% 201%
Total (all categories) 120% 103% 137% 108%
*Estimates for these categories do not include the value of
affiliated (intra-firm) transactions, which are estimated
separately.
Table 4. Regional Markets for U.S. Services Exports, 1994
(millions of dollars)
Western
U.S. Exports Europe Hemisphere Japan Other
__________
Data prepared by the U.S. Department of Commerce, International Trade Administration, Office of Service Industries, based on Bureau of Economic Analysis estimates that are reported annually in the "Survey of Current Business."