04The industrial make-up of the jobs miracle

The sectors that businesses operate in, and their age, reveal policy-relevant patterns for future job creation. Specifically, this section shows such patterns in ‘local services’, which sell to local customers, and ‘exporters’ that typically sell to markets on a regional, national or international scale. Box 4 gives more detail on these definitions.

Local services businesses created the majority of new jobs

Of the roles generated, most were in local services industries. Not only were businesses such as restaurants, shops and cafés responsible for large shares of jobs (69 per cent of all private sector posts in 2013), they accounted for almost three quarters (72.1 per cent) of private sector roles created between 2013 and 2019 (see Figure 8). This is true for both urban and non-urban areas.

Figure 8: Local services are jobs intensive, and contributed to even larger shares of the jobs miracle

Source: ONS, Business Structure Database (BSD)

Sectors affected by Covid-19 lockdown restrictions were large contributors to job creation – hospitality, sports activities, amusement and recreation activities, accommodation and construction saw significant growth. They accounted for 28 per cent of the private sector positions generated and made up 32 per cent of all JRS claims in July 2020.

It is likely that any jobs growth in the coming years will see a similar contribution from local services, given the more labour-intensive nature of these businesses and the large share of roles they account for. The creation of jobs in these sectors occurred without government interventions, suggesting they require little direct policy support. However, given the demand side shocks that Covid-19 has wreaked, specific policies may be needed to support growth, particularly where it aligns with broader ambitions such as net zero.

Box 4: What are the differences between local services and exporting industries?

In the private sector, there are two types of business.

Local services sell directly to consumers and include estate agents, hairdressers and cafés. Their location decisions are determined predominantly by where their customers live, work or trade from.

Exporting businesses, such as investment banks, advertising agencies and manufacturers, sell their products or services outside their local area to regional, national and international markets. As such, they are not tied to one local market and generate income independent of the performance of their local economy.13

Exporters could, in theory, locate anywhere in Britain. However, previous Centre for Cities’ research shows that, in practice, the most productive sectors are increasingly clustered in dense, vibrant urban areas.14

For this research, exporters and local services are defined using Standard Industrial Codes. They are used to identify jobs in sectors that have the potential to sell to markets beyond their local area.15

The economically strongest cities and large towns had the most dynamic exporting sectors

While local services businesses created most new roles, high gains and losses seemed to be only loosely related to the strength of the economy. This is unlike the picture for exporting jobs, where levels of dynamism were more closely related to underlying economic performance. As Figure 9 shows, cities and large towns with greater levels of both job creation and losses in their export sectors tended to have higher wages. This suggests that, for the exporting sector at least, dynamism is linked to economic performance.

Figure 9: Economically more successful cities have a more dynamic exporting sector

Source: ONS, Business Structure Database (BSD), ONS, Annual Survey of Hours and Earnings (ASHE), average gross weekly workplace-based earnings. Own calculations for PUA-level weighted by number of jobs, CPI inflation adjusted.
Note: See Box 1 for an explanation of job churn.

Greater dynamism is also linked to the proportion of residents in a city or large town who have a higher level of qualifications (see Figure 10). This is in line with other research that shows the export sector to be related to skills, and is likely to reflect the requirement for higher-skilled exporters to want higher-skilled workers to help their businesses grow.16 This means that encouraging job creation in local services and exporting activities requires different types of interventions. To encourage places to generate more roles in exporting industries, the Government should support policies aimed at increasing the share of the population with higher qualifications. For local services jobs, the focus should be on supporting residents financially to stimulate the demand for these types of positions.

Figure 10: Cities with more dynamic export sectors have higher-skilled residents

Source: ONS, Business Structure Database (BSD); ONS, Annual Population Survey, resident analysis
Note: See Box 1 for an explanation of job churn.


  • 13 Rowthorne R (2018), Combined and uneven development: Reflections on the North-South divide. Spatial Economic Analysis, 5(4): 363-388
  • 14 Serwicka E and Swinney P (2016),Trading places: Why firms locate where they do, London: Centre for Cities
  • 15 For detailed definitions see Appendix 2 in: Magrini E (2019), Opportunity Knocks? Economic outcomes for low-skilled people in cities, London: Centre for Cities.
  • 16 Clayton N (2017), Trading places 2: The role of cities in delivering the industrial strategy, London: Centre for Cities