nonmanufacturing

Nonmanufacturing is an economic term used to describe sectors of the economy that do not involve the production of tangible goods through manufacturing processes. In macroeconomic and accounting contexts, it is used to separate goods-producing activities from services and other non-goods-producing activities. In national accounts, nonmanufacturing encompasses most industries outside the manufacturing sector, including services (such as health care, education, finance, information technology, and professional services), wholesale and retail trade, transportation and utilities, construction, real estate, and government services.

The term is often used to highlight the contrast between goods production and other value-creating activities. Nonmanufacturing sectors typically include services, trade, information, finance, real estate, and public administration, among others. Construction is commonly treated as nonmanufacturing in this framework, since it does not produce durable manufactured goods as its primary output.

Economic significance and measurement vary by country, but in many developed economies the nonmanufacturing sector accounts for a large majority of gross domestic product and employment, reflecting a general shift toward services and information-based activities. Indicators used to track nonmanufacturing include service-sector purchasing managers’ indexes, services output and productivity, and other value-added measures.

In managerial accounting, nonmanufacturing costs are those not tied to production, such as selling, general, and administrative expenses. This contrasts with manufacturing costs, which relate to the production of goods. See also manufacturing, service sector, and nonmanufacturing costs.