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An often overlooked metric, sectoral GDP, will be key to assessing the post-pandemic recovery, argues S&P Global Ratings.

In a new report, S&P’s global chief economist, Paul Gruenwald, noted that there are several ways to calculate GDP. Most common is the expenditure method. Less well-known is the sectoral method, which measures GDP by industry. It’s an indicator that takes much longer to compile and is typically released much later than conventional GDP measures.

However, the report argued that given the widely disparate effects of Covid-19 on the economy, tracking sectoral GDP in the months ahead will be critical to evaluating the health of the recovery and how the composition of the economy may be changing in response to the effects of the pandemic.

To date, services sectors have been hit much harder by the pandemic than goods-producing sectors.

According to S&P, in the U.S., the GDP of services sectors is 4% lower than pre-pandemic levels, while goods GDP is down by 1.6%.

So far, only three of 21 sectors have returned to their pre-Covid GDP levels: agriculture, forestry and fisheries; finance and insurance; and telecoms.

Given the uneven impact of the pandemic, S&P said that sectoral GDP will be most useful in tracking the recovery and the evolution of the economy as vaccines are distributed and public health restrictions are lifted.

“Sectoral GDP is a must-watch data point for 2021 and beyond as the Covid-19 recovery unfolds,” the report said.

“The sectoral story also includes labor market outcomes as workers must reskill and relocate, and credit outcomes as changing sectoral fortunes mean shifts in profitability, credit quality and firm survival and renewal.”