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Economy in Brief

U.S. Factory and Business Sectors Drive GDP Growth
by Tom Moeller  April 25, 2014

Industry output figures for Q4'13, released today by the Commerce Department, provide a detailed value-added break-out of economic performance. Overall economic growth during 2013 averaged 2.6% per quarter, the quickest over the last three years. The figures show that three sectors accounted for nearly one half of the growth. The factory sector contributed slightly more than one-quarter of the advance. The professional and business services sectors gave ten percent to growth while the finance, insurance and real estate industries provided the same ten percent. These are fairly healthy percentages given that, collectively, the three sectors account for just over one-quarter of total payroll employment.

While construction, mining, and education, health care and social assistance sectors account for a meaningful seven percent of total employment, they contributed negligibly to overall economic growth last year. Low capital-to-labor ratios explain most of the meager productivity in these sectors. Then there's the government sector. During all of last year, it detracted slightly from economic growth although it accounted for 16% of total employment.

Workforce downsizing has very much become the rage as budget cutting and profit maximization are key economic priorities. In the factory sector, this clearly has been enhancing corporate profitability. In other private sectors, limited pools of skilled labor are always an issue. In the government sector, workforce attrition may reduce spending if budget balance is a goal.

These National Income figures are available in Haver's USNA database.

Contributions to Real GDP Change (%, AR) Q4'13 Q3'13 Q2'13 Q1'13
Total Real GDP 2.6 4.1 2.5 1.1
  Private Sector 3.1 4.3 2.6 1.3
    Manufacturing 1.2 0.5 0.6 1.1
    Professional & Business Services 0.8 1.1 0.6 -1.3
    Wholesale Trade 0.4 0.4 0.1 0.1
    Mining 0.3 0.0 0.3 -0.4
    Information 0.3 0.4 0.1 0.6
    Art, Entertainment, Recreation, Accommodation and Food Services 0.3 0.0 -0.1 0.1
    Education, Health Care and Social Assistance 0.1 0.2 0.1 0.2
    Finance, Insurance & Real Estate 0.0 0.8 0.9 -0.5
    Agriculture -0.1 0.2 0.1 1.2
    Retail Trade -0.1 0.3 -0.1 0.4
    Construction -0.2 0.2 0.1 -0.1
  Public Sector -0.3 -0.2 -0.2 -0.2
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