Are you being served by the services boom?


Industries wax and wane over time.

Just like the Grace Brothers staff above, you may have noticed that Australian retailers having been doing it tough of late. The retail industry happens to be in transition at the moment, with a lower ‘traditional’ retail spend in Australia occurring at the same time as key players seek to defend against or join the online/marketplace economy.

Nonetheless, retail will be back stronger than before, but this time it will be more globalised, customer-facing and experience-rich.

Miners and constructors have also been doing it tough until recently, and some still are. With some up and downstream battery minerals projects happening here in WA plus a surge in iron ore replacement projects and increased demand for WA ore as a result of the Brazilian disasters, there is new life in the mining industry in particular.

QE Infinity, low rates and various other political/populist events have stirred up Gold, so taken all together it’s no surprise that resources industry wages and mine worker accessibility are back on the agenda.

Our services industry is strong.

However, the bright spot in the RBA Chart pack this month has to do with Australia’s gushing services industry.

Here’s 4 charts which illustrate its strength in terms of investment, output and industry employment growth over the past 5 years - plus the growing transfer of these skills offshore (turbocharged by cloud and e-commerce solutions).

Mining investment made way for services.

As mining investment has declined from a >50% of total investment to around 25% in 2018, business services plus financial and insurance services have grown to around 27-28% of total investment - a massive transition since the services trough of 2013.



While the cyclical nature of the mining and construction sectors are well illustrated in the chart below, the chart also shows the massive decline in manufacturing and a moderate decline in retail and wholesale trade output, over a long period.

Conversely, we have seen a steady rise in other business services over the past 20 years. We have also seen a steady growth in financial and insurance services over the past 15 years. Software in general will continue to fuel this growth.


Employment Growth carried by booming services.

Over the past 6 years, Australian jobs growth has been carried almost entirely by the services sectors and construction (with the construction line below nicely illustrating the civic construction bonanza on the eastcoast).


Services skills transfer.

Taking care to note that the scales on both sides of the chart below are in different increments (i.e., quantum of resources exports far outstrips other products and services) what is notable about the services sector exports is that they have been growing nearly as fast as resources exports for the past 5 or 6 years, and with only a few shallow dips.


Are you being served?


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