Profitability in services is three times higher than in factories

Julian Harris
Follow Julian
THE PROFITABILITY of companies in the UK’s service sector has jumped to over three and a half times the level of their peers in the manufacturing sector, official figures revealed yesterday.

The net rate of return for service firms jumped to 16.9 per cent in the third quarter of last year, the Office for National Statistics (ONS) said – up from 16.5 per cent in quarter two and 15.8 per cent in the opening three months of 2012.

In the factory sector, however, the rate of return was just 4.7 per cent in the third quarter, up just 0.1 percentage point from quarter two.

The total level of profitability across sectors came in at 12.2 per cent, the figures showed.

“The net rate of return is a common way of measuring the profitability or economic success of a company or sector,” the report explains. “It is calculated by expressing the economic gain or profit as a percentage of the capital used to produce it.”

The UK’s GDP grew by 0.9 per cent during the third quarter of 2012.