This article presents the latest business cost structure of the manufacturing and services sectors, recent trends in business costs, as well as the outlook for the key components of business costs.

Business Cost Structure of Manufacturing and Services Sectors

Labour cost, royalty payments and “others” are the main components of business costs in the manufacturing sector; labour cost also constitutes a major cost component in the services sector

For firms in the manufacturing sector, labour cost, royalty payments and “others” constitute the main components of business costs. Collectively, these components account for around 77 per cent of the business costs of small- and medium-sized enterprises (SMEs) and 66 per cent of the business costs of non-SMEs in the sector.

For firms in the services sector, labour cost is also a major cost component, with its share of business costs ranging from around 10 per cent for firms in the transportation & storage sector, to around 39 per cent or more for firms in labour-intensive sectors such as accommodation, food services and retail trade.

For both the manufacturing and services sectors, non-labour production taxes (e.g., property, road and other indirect taxes) account for a very small share of business costs, at less than 1 per cent for SMEs and non-SMEs in most sectors. Please see further details in Annex A.

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