Services sector surges ahead

Turnover in services surged last year, according to the first detailed figures on the sector published by the Office for National Statistics. Architectural and engineering consultancy, private eyes and security services, and car dealership were among the fastest-growing services in the 12 months to September.

The statistics are the result of an initiative launched by the then-Chancellor of the Exchequer, Norman Lamont, to improve the quality of economic statistics. The scale of the late 1980s boom had taken policy-makers by surprise partly because information on services - which make up two-thirds of the economy - was so limited.

The Bank of England has been pressing since last May for the collection of more statistics on the sector because of fears that the emphasis on manufacturing industry in the monthly economic statistics is as misplaced now as it was at the end of the 1980s.

In its Inflation Report, the Bank pointed out that the only timely monthly figures on the bulk of the economy were the official retail sales statistics and a CBI survey of retailing, wholesaling and motor traders.

Previously published figures for the total service sector show that it grew 3.4 per cent in real terms in the year to December, twice the rate of growth of industrial production.

So far the additional figures are limited to quarterly turnover statistics for only a proportion of total services. They do not break down the sales growth into separate price and activity increases. The ONS has calculated the figures back to the start of 1995.

There were marked increases in turnover in a wide range of businesses in the year to the third quarter of 1996. For example, sales of new and used cars, car rental, restaurant and campsite turnover, and film and video activities were all sharply higher compared with the same quarter a year earlier. So was turnover in "other" services, including dry cleaning, hair dressing and funerals.

There was also strong growth in business services such as law, accountancy, tax and management consultancy and market research.

Computer activities, from software consultancy and data processing to maintenance and repair, grew at an equally fast pace. The industry - which excludes software sales - was worth nearly pounds 15bn in 1995.

However, advertising turnover, and sales by travel agencies and tour operators fell during the year.