Mark Knold, Supervising Economist
An economy can be segmented into various industrial divisions. One of the simplest is into private sector goods-producing and private sector service-providing segments. By saying “private sector” we are implying a third segmentation, that being government employment (i.e., public sector). But the private sector is the tangible driver of an economy; therefore, it is informative to isolate upon the private sector.
As the name implies, the goods-producing segment features the production of a physical good. These usually come out of the mining, construction, or manufacturing industries; thus, these industries are the goods-producing segment. In contrast, the service-providing segment does not produce physical goods but instead provides services to consumers or businesses within the economy. Some of these might be the sale, repair, maintenance, or distribution of the goods-production products, but that is different than the production of the physical product itself.
Why do we separate the economy into these two segments? The simple answer is the production of a physical good versus a non-physical good. But the answer also goes deeper. There is a general partition between the two segments by the skills and education requirements needed, as well as a general wage differentiation.