What is the service sector?
The service sector produces intangibles, specifically services instead of goods, and according to the US Census Bureau, it includes various service industries, including warehousing and transportation services; information services; securities and other investment services; professional services; Waste Management; health care and social assistance; and arts, entertainment and recreation. Countries whose economy is centered on the service sector are considered more advanced than industrial or agricultural economies.
Key points to remember
- The service sector is the third sector of the economy, after the production of raw materials and manufacturing.
- The service industry includes a wide variety of tangible and intangible services ranging from office cleaning to rock concerts to brain surgery.
- The services sector is the largest sector in the global economy in terms of value added and is particularly important in more advanced economies.
Understanding the service industry
The service sector, also called the tertiary sector, is the third level of the three-sector economy. Instead of producing products, this sector produces maintenance and repair, training or consultancy services. Examples of service industry jobs include housekeeping, visiting, nursing, and teaching. In contrast, people employed in industrial or manufacturing sectors produce tangible goods, such as cars, clothing, or equipment.
Among the countries that attach great importance to the service sector, the United States, the United Kingdom, Australia and China are among the first. In the United States, the Institute for Supply Management (ISM) produces a monthly index that details the general state of business activity in the service sector. This index is considered a measure of the country’s overall economic health, as approximately two-thirds of US economic activity occurs in the service sector.
The service sector in the tripartite economy
The service or tertiary sector is the third piece of a tripartite economy. The first economic sector, the primary sector, covers agricultural, mining and agricultural activities in the economy. The secondary sector covers manufacturing and commercial activities that facilitate the production of tangible goods from the raw materials produced by the primary sector. The services sector, although ranked as the third economic sector, is responsible for most of the business activity in the global economy.
Technology in the service industry
Technology, especially information technology systems, shapes the way businesses in the service industry operate. Companies in this sector are rapidly focusing more on what is known as the knowledge economy, or the ability to outperform competitors by understanding what target customers want and need, and operating in a way that responds quickly. to those wants and needs at minimal cost. In almost every industry in the sector, companies are adopting new technologies to boost production, increase speed and efficiency, and reduce the number of employees needed to operate. This reduces costs and improves incoming revenue streams.