Factory orders down

[phk]

a service economy is unsustainable

Why?

It's simply the LR trend to become a service-oriented economy (at least theoretically).

As productivity in agriculture increases it frees up labor for manufacturing industries and once productivity increases in manufacturing industries, labor is again freed  up to work in service industries. This can be seen also to correlate to the rural => urban => suburban transformation throughout our economic history (and other countries as well).

In terms of rate of productivity growth as defined by a production fn in the form of f(K,L) that would imply Q/L=A, we see that in terms of the rate of growth (conceptually think like a second derivative, x''). Agriculture > Manufacturing > Service.

This is pretty much confirmed by the graph that Beet posted, showing the overall value of manufacturing output to increase  (which is due to two things 1) productivity increases and 2)"moving-up-the-value-added-ladder").

[phk]

a service economy is unsustainable

Why?

It's simply the LR trend to become a service-oriented economy. As productivity in agriculture increases it frees up labor for manufacturing industries and once productivity increases in manufacturing industries, labor is again freed up to work in service industries. In terms of rate of productivity growth (i.e. the second derivative x''). Agriculture > Manufacturing > Service.

The problem is concentration, not specific type of work.  As productivity increases we need greater and greater amounts of redistribution to correct concentration, and the resultant lack of demand which makes the system unstable.   Essentially public policy should ensure that nearly all of the increase in productivity goes to worker incomes/benefits/holidays/services/etc., instead of the small fraction currently so allocated.

Well opebo, it depends.

Productivity-boosting technology changes demand for labor through two mechanisms:
A. Substituting for some human tasks
B. Complementing other human tasks

Or perhaps a hitherto combination of the above.

Workers will initially benefit from A.
They will be initially hurt from B.

But I think over the long run, productivity increases should lead to benefits for all, assuming we have enough combinatorial innovation (a term that Hal Varian came up with) left in the system to generate new industries and sectors.