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Business, consumer and property services

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Our mining, oil and natural gas industries may get all the headlines, but they will not displace service industries any time soon. The services sector dominates the economy, generating nearly $758.9 billion worth of output in 2006 and employing three-quarters of working Canadians.

Services make the economy run and save time for consumers. Canadian businesses rely heavily on the services sector for a wide range of activities, such as balancing their books, hauling their goods, building their corporate websites, and disposing of their industrial wastes. Consumers also depend on service providers such as banks, urban transit, hairdressers, dry cleaners and many others to help manage their busy days.

Both businesses and consumers also turn to property service companies to manage the business of buying, selling and taking care of their real estate.

Significant long-term shift

Once known as “hewers of wood and drawers of water,” Canada has undergone a significant long-term shift away from an economy based on natural resources. As industries diversified and Canadians took up or invented new technologies, the services sector grew to accommodate the changing economy.

After the Second World War, the services sector accounted for 49% of the Canadian economy; by 2006 it generated almost 70% of our gross domestic product (GDP).

The work force has adapted to the new economy. Today, more and more highly skilled Canadians provide world-class professional, technical and financial services. From 1991 to 2006, for example, the number of workers employed in professional, scientific and technical services grew 81%; the number of workers in primary industries, excluding agriculture, grew only 11%.

Mixed picture in the provinces and territories

All the provinces are now strongly oriented toward services, although how big a role services play depends to some extent on their economic strengths. In 2006, Nova Scotia, Prince Edward Island, Ontario and British Columbia saw 72% to 78% of their GDP generated by services. The continued strength of the natural resources sector in Newfoundland and Labrador, Saskatchewan and Alberta lower that proportion to 59% to 64% of those provinces’ GDPs. Newfoundland and Labrador has actually seen its proportion of GDP from services drop almost 10% since 1999.

The three territories present a curious mix. The services sector plays a more significant role in both Yukon (83%) and Nunavut (74%) than in Canada overall. However, in the Northwest Territories, only 41% of GDP stems from services. The diamond boom has transformed the Northwest Territories’ economy, skewing it toward natural resources production, so that services’ share of territorial GDP shrank by 20% from 1999 to 2006, even as the services sector there has been growing.

Fastest growing service industries

Although natural resource booms in our mines and oil fields have driven economic expansion on a regional basis, they have not changed the nationwide trend: in the decade from 1997 to 2006 alone, the services sector grew by 38%, compared with 26% growth for goods-producing industries.

The fastest growing service industries over this decade included administrative support, waste management and remediation services, wholesale trade, and professional, scientific and technical services.

Information and data processing services—Canada’s news services, libraries and archives, online information service providers and data processors—also grew rapidly, up 73% over the decade. Broadcasting and telecommunications grew 71%, as Canadians signed up for new services, such as digital and satellite television, and bought cellphones. Still, all information and cultural industries combined remain a small component of the services sector, contributing $44.4 billion to GDP in 2006.

Whether for amusement or exercise, Canadians also regularly indulge in arts, entertainment and recreation services, to the tune of $9.3 billion in GDP in 2006. Good health appears to have been a major motivator in 2004, as fitness and recreational sports centres saw a 21% jump in revenue to more than $1.5 billion. Golf courses and country clubs surged by more than 15%, earning $2.3 billion.

Growing numbers of households have been devoting more and more of their budget to entertainment services outside the home—attending movies, performing arts shows and sports events and visiting heritage institutions. From 1997 to 2005, spending on these activities climbed 37%. On average, each Canadian household spent $288 on entertainment services outside the home in 2005.

Canadians are increasingly pampering themselves, too. Personal care providers such as hair and aesthetics salons, spas and the like have seen their revenues steadily increase, reaching about $3.9 billion in 2004. Among personal services, sending the laundry and dry cleaning out has been popular: that industry generated revenues of $1.9 billion in 2004.

Canadians have also been spending more on services in the real estate market. The long-term upward trend in residential real estate prices has benefited agents, brokers and appraisers, whose total revenues surged by more than 9% to $9.2 billion in 2005.