Bermuda's economy dropped off dramatically in the fourth quarter of last year, according to statistics released by the Government yesterday.

The numbers in the Quarterly Bulletin of Statistics paint a picture of a slumping local economy being propped up by its international business and financial services sectors.

Employment income — which had held up pretty well for the first three quarters of last year — was nearly eight percent lower in the last three months of 2009 than for the same period in 2008.

The Island's wages total looks set to decline further, particularly after HWP announced its HomeZone store will close at the end of April with the loss of 14 jobs, Bermuda Telephone Company announced plans to trim its work force by 25 and a net loss of seven jobs last week at Cable & Wireless.

For the year, virtually all sectors paid out less in salaries and wages than last year. The exceptions were the public sector, whose employment income rose 5.2 percent, and business services, which experienced a three percent rise.

In the fourth quarter however, Government spending clampdowns took their toll as public sector employment income dropped 12.4 percent, and every sector of the economy paid out less in wages. The Bulletin stated the Island's total employment income figure for 2009 fell 2.3 percent to $3.027 billion.

Particularly hard hit was the hospitality sector, as hotels and restaurants provided 55.2 percent less in wages in 2009 than they did the year before. These figures include little impact from the closure of the Elbow Beach Hotel, which occurred one month before the end of the year.

The numbers illustrate graphically how the hospitality industry has diminished as a provider of paid work in the economy.

Hotel and restaurant staff took home $66.4 million in 2009, dwarfed by the combined earnings of $851 million of international business employees.

Public-sector workers earned $443.1 million last year, while the "all other" segment paid out $537.4 million. The banking, local insurance and real estate sector provided $328.7 million in wages. Next came business services ($314.7 million), wholesale and retail ($215.1 million) and construction ($182.1 million).

With fewer dollars going into working residents' pockets, it was not surprising that spending slumped last year. Retail sales dropped 5.7 percent last year, with all sectors suffering falls apart from food stores, whose sales rose 5.1 percent.

Apparel stores were worst affected, seeing a fall of 13.2 percent in revenue. Motor vehicle dealers suffered a 10.2 percent fall in sales, while service stations — who were impacted by the decline in the price of fuel — took an 11.7 percent hit.

Imports also fell by 8.2 percent, although imports from the UK bucked the trend, rising 17.4 percent.

Government revenues plunged by $36.5 million, or 3.9 percent, to $902.4 million.

The largest revenue stream for Government — payroll tax — fell 1.4 percent to $336.5 million in 2009.

In the 2010/11 fiscal year, Government hopes to raise an extra $72 million by raising payroll tax rate from 14 percent to 16 percent, and the payroll tax cap from $350,000 to $750,000.

The continuing decline in tourism was apparent in the hotel occupancy tax revenue, which fell 38.1 percent to $7.7 million.