Services Sector Fact Sheet 

KEY POINTS

• In 2006–07, services accounted for 65 per cent of GDP (around 77 per cent of total industry value added). Over the last 20 years services sector value added increased at an average annual rate of 3.9 per cent. The largest contributions to economic production in 2006–07 came from property & business services (11.8 per cent), finance & insurance (7.3 per cent) and construction (6.7 per cent).
• Services industries accounted for 84 per cent of the two million Australian businesses operating as at June 2007. During 2006–07, a net of 48,000 additional businesses entered the services sector—an increase of 2.9 per cent. Three quarters of these were entrants to the property & business services, construction and finance & insurance industries.
• The services sector is the biggest employer in the economy, employing more than 8.8 million persons the end of 2006–07 financial year. This is around 85 per cent of the Australian workforce. The biggest employer within the services sector is retail trade (14.2 per cent of total employment), followed by property & business services (12.1 per cent of total employment), and health & community services (10.5 per cent of total employment).
• Services exports totalled $46.2 billion in 2006–07, an increase of 10.5 per cent on the previous year. The largest components of services exports were travel services, which contributed $25.2 billion (of which $11.3 billion relates to education travel) and transportation services, which contributed $8.8 billion.
• In 2004 and 2005 (the latest ABS data), 32 per cent of all surveyed businesses in the service sector were innovating. The largest proportion of innovating businesses was in the electricity, gas & water supply industry (49 per cent), followed by wholesale trade (43 per cent) and finance & insurance (38 per cent).

FACTS AND FIGURES

Definition and composition

The services sector is the broad description for a group of industries many of which are covered by other portfolios and at other levels of government. By statistical convention, the services sector is composed of the following industries: electricity, gas & water supply, construction, wholesale trade, retail trade, accommodation, cafes & restaurants, transport & storage, communication services, finance & insurance, property & business services, government administration & defence, education, health & community services, cultural & recreational services and personal & other services.

Economic performance

In 2006–07, services industries accounted for $647 039 million of gross value added (65 per cent of GDP). Over the last 20 years, services sector value added increased at an average annual rate of 3.9 per cent. The largest contributions to economic production in 2006–07 came from property and business services (11.8 per cent), finance & insurance (7.3 per cent) and construction (6.7 per cent).

Size and growth

Services industries accounted for 84 per cent of the 2,011,770 Australian businesses operating as at June 2007. The property and business services industry had the largest number of businesses (507,508), followed by construction (322,404) and retail trade (219,308). During 2006–07, a net of 48,000 additional businesses entered the services sector—an increase of
2.9 per cent. Three quarters of these were entrants to the property and business services, construction and finance and insurance industries (see Table 1 for more detail).

Employment

The services sector employed more than 8.8 million persons as at May 2007 (last available data for 2006–07). This is around 85 per cent of the Australian workforce. The biggest employer within both the services sector and in the Australian economy is retail trade (14.2 per cent of total employment), followed by property & business services (12.1 per cent of total employment), and health & community services (10.5 per cent of total employment).

Exports and imports

Services exports in nominal terms totalled $46.2 billion in 2006–07—an increase of 10.5 per cent on the level of 2005–06. The largest contributions to services exports were made by travel services, which accounted for $25.2 billion (of which $11.3 billion relate to education travel) and transportation services, which contributed $8.8 billion. Services imports into Australia totalled $44.5 billion in 2006–07—an increase of 8.3 per cent on the total for 2005–06. Trade in services has been in surplus for Australia every year since 2000, with the 2006–07 services trade surplus expanding to $1.8 billion.

Innovation

Innovation is the development, introduction or implementation of (1) new or significantly improved products, (2) marketing, (3) operational processes, and (4) organisational/ managerial processes. In 2004 and 2005 (latest data), 32 per cent of all surveyed businesses in the service sector were innovating. The largest proportion of innovating businesses was in the electricity, gas and water supply industry (49 per cent), followed by wholesale trade (43 per cent) and finance and insurance (38 per cent).

  TABLE 1: Services sector composition and economic performance, 2006-07

Source: ABS (a) during financial year 2006-07; (b) as at June 2007.