The International Trade Commission issued June 8 its annual report on recent trends in U.S. services trade. This year’s report focuses on professional services and includes chapters on four specific industries: accounting and auditing services, architecture and engineering services, legal services, and management consulting services. Each chapter analyzes global market conditions in the industry, examines recent trade performance, and summarizes the industry’s outlook.
The ITC found that the U.S. remained the world’s leading exporter and importer of services in 2015. Highlights of the report include the following.
- In 2015, the value of U.S. commercial services exports was $730.6 billion (15 percent of global services exports), while imports totaled $467.1 billion (10 percent of global services imports). Preliminary data also indicate that in 2016 U.S. services exports increased slightly to $732.6 billion, while imports rose to $482.0 billion.
- From 2014 to 2015, U.S. cross-border services exports rose by one percent (compared to seven percent in 2013–2014), while U.S. services imports grew by just over two percent (down from almost five percent the previous year).
- Within the services sector, sales by foreign affiliates of U.S. firms – the leading channel by which many U.S. services are delivered to foreign markets – totaled $1,503.4 billion, while the value of services purchased from foreign-owned affiliates in the U.S. totaled $918.7 billion.
- The U.S. had a surplus of $48.7 billion in international trade in professional services and in 2015 the subsector accounted for 19 percent of both imports and exports. Professional services accounted for about eight percent of total sales by foreign affiliates of U.S. firms and 10 percent of total purchases from foreign-owned firms located in the U.S.
- The contribution of private sector professional services to U.S. GDP was $2.6 trillion in 2015, accounting for 19 percent of U.S. private sector GDP. The output of these services grew by 3.6 percent in 2015, faster than the output of private sector services as a whole (2.9 percent).
- Among professional services industries, the healthcare and social assistance sector was not only the largest – accounting for eight percent of total private sector GDP – but also registered the fastest growth (4.5 percent) in 2015. During the same year, education services recorded the slowest growth (0.2 percent).
- Professional services accounted for 25.8 percent of total private sector employment in the U.S., or nearly 29 million full-time equivalent employees – a share that has remained stable since at least 2010. Employment in healthcare and social assistance represented more than half (58.4 percent) of this total, followed by miscellaneous professional, scientific and technical services (18.5 percent) and education services (10.8 percent).
- Labor productivity in professional services grew by 0.9 percent, though this represents an improvement over the 2010-2014 period when labor productivity remained essentially unchanged (0.3 percent). Workers in the professional services industry earned an average wage of $65,861 in 2015, which exceeded the private sector average but trailed all other services categories except distribution services.
- The business models of professional services firms are evolving in response to changes in technology. Software is increasingly able to perform some routine tasks like tax preparation or legal research but the Internet also enables some services to be delivered digitally across borders and enhances the ability of small firms to compete in sectors like consulting.
- Professional services firms are also adapting to changing economic conditions by finding new markets, such as legal services in China, and niches within industries such as green building in architecture services, as well as providing services that blur the lines between industries. Licensing, certification, or other registration requirements continue to pose challenges to professional services firms, particularly where such requirements are opaque, though the effects vary by market.