- The Washington Times - Wednesday, September 8, 2004

The Bush administration next week plans to release newly created data on the service sector, the first new economic indicator from the U.S. Census Bureau in almost 40 years.

Service companies produce the bulk of the nation’s output but are poorly measured in government economic data. The new quarterly survey will measure revenue from telecommunications, software publishing, employment services, media and other service industries, the Commerce Department said yesterday.

“This is the first step on the road to building much better information on the service sector of our economy,” said Kathleen Cooper, commerce undersecretary for economic affairs..

Service industries measured by the new census survey account for almost 55 percent of U.S. economic activity. If retail, wholesale and government are included, services account for 80 percent of gross domestic product.

The Bureau of Economic Analysis, which uses slightly different data to track services, said the sector accounted for 43 percent of economic output 40 years ago. Services first passed 50 percent of economic output in 1983, and in 2003 represented almost $6.4 trillion of the United States’ $11 trillion in gross domestic product.

But data collection has not kept up with the growing importance of the sector. Services information had been available only in annual and five-year surveys, a pace too slow to help companies adjust in a rapidly shifting economy, Commerce Department officials said.

“It’s certainly the case that we don’t have very good data for the service sector,” said Charles McMillion, president of MBG Information Services, a D.C. analysis and forecasting firm.

The Coalition of Service Industries, a D.C. trade group, said the figures would help create a clearer picture of the role services play in the economy.

The companies are especially sensitive to ups and downs in the business cycle, so the information is valuable for tracking industry trends, making production and hiring decisions, and determining immediate corporate strategies.

“We have such a diverse economy now with all sorts of software, financial services, even the manufacturing sector is so much more diverse than it was 20, 30 or 50 years ago. And one administration after another has not felt the need to improve data quality,” Mr. McMillion said.

Because companies provide proprietary information in the survey, only the government can effectively create such a broad economic report, Mr. McMillion said.

Peter Morici, a University of Maryland professor and former government economist, said federal data collection efforts more closely reflect a mid-20th-century economy, rather than an early-21st-century economy.

“We don’t have enough detail for activities that have grown more important over the last several decades,” he said.

“Focusing on industry data, the government does a good job on manufacturing but not nearly good enough job on services. The level of detail is not adequate,” he added.

The presidential campaigns of President Bush and Sen. John Kerry have been quick to pounce on economic figures to make the case that their policies will help create more and better-paying jobs.

But the quarterly services survey information scheduled for release Monday will reach back only to the fourth quarter of 2003 and is not seasonally adjusted, offering little historical perspective on the sector’s ups and downs.

The Bush administration began planning for the new survey in 2002 to update economic data.

Commerce plans to measure services in the following categories: professional, scientific and technical, administrative and support, and waste management and remediation. Those broad categories include telecommunications, computer system design, media and other service companies.

Hospitals and nursing home surveys are scheduled to be added in 2005.

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