Over the last decade, Israelis have increased their spending on services by some 14 percent, or NIS 500, with 32% of the average household expenditures, or some NIS 3,400, going towards services, the Federation of Israeli Chambers of Commerce reported on Tuesday.
Average spending on services is expected to rise to NIS 4,100 in 2008, according to the FICC.
"The name of the game today is services," said FICC President Uriel Lynn. "The increase in terms of spending is one of the most important growth factors in the economy because this increase has been the major force behind the creation of more jobs here over the last number of years."
According to FICC economists, 18% of household spending on services is allocated for education, 23% for transportation, 14% for communications, 13% for culture and recreation, 12% for health services, 11% for home maintenance, 3% for recreation and 6% for other services.
Additionally, the report noted that regardless of economic standing, spending on services has increased over the last 10 years, as those in the bottom fifth of the economic bracket allocate 22% of total expenditures on services, while those in the top fifth make, on average, 32% of their total purchases on services.
The gap between the country's top fifth and bottom fifth, said the FICC, is most apparent when it comes to allocations for home maintenance, with those in the top fifth spending NIS 780 a month, some 9.5 times more than those in the bottom fifth spend on similar services. Communications spending meanwhile, is more balanced, with the top fifth spending NIS 502 a month, only double that of the country's lowest earners.
The growth in service spending is not just a local trend.
"In developed economies in the western world, services account for approximately 50% of the GDP, while in Israel this number stands at 38%," Lynn noted.
Separately, the Manufacturers Association of Israel reported this week that for the year, Israeli households are projected to spend an average of NIS 9,485 on furniture, a jump of some 13% from 2005, the last time the Association calculated local furniture spending trends. Over the last two years, the Association's report said, Israelis have spent some NIS 6 billion on furniture.
The most popular purchases have been couches, children's beds and living room chairs, the report noted, as 17% of households purchased at least one of those items in the last two years.
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