Service industries

Outlook

The output of the Territory’s service industries is expected to increase in the short term with the continuing return of overseas visitors, and will be supported longer term by a strong pipeline of construction projects.

The service sector covers a broad range of discrete industries, which accounted for 17.1% of the Territory’s GSP and 33.4% of the Territory’s employment in 2021-22.

The performance of the service industries over the past 5 years was mixed (Chart 2), reflecting the sector’s diversity. Accommodation and food services output was subdued during COVID-19 as visitor numbers fell due to border closures. Professional, scientific and technical services output peaked in 2017-18 and has since returned to pre-INPEX levels following the completion of the INPEX construction phase. Financial and insurance services output saw strong growth over the past 5 years as households took advantage of low interest rates and government incentives to purchase homes.

Looking forward, demand in service industries with strong links to tourism, such as accommodation and food, transport, and arts and recreation services, is expected to improve supported by the return of overseas visitors, the resumption of the cruise ship industry and continued strong domestic demand.

Chart 2: Territory service industries gross value added

Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0

The tourism-related service industries have been some of the most impacted by labour shortages over the past couple of years, with labour often being the limiting factor for output. While the labour market is expected to remain relatively tight in the short term, industries will benefit from the return of overseas migration, which will boost labour supply. A number of industry-led initiatives to find more overseas workers should also assist in easing labour shortages. For more information on the outlook of the tourism industry, refer to the Tourism section.

Large construction projects are also expected to support service industry output over the outlook period. In particular, output for professional, scientific and technical services is expected to be supported during the design and construction phase of large projects, such as the:

• Darwin ship lift facility
• Darwin Education and Community Precinct
• National Aboriginal Art Gallery in Alice Springs
• Civic and State Square Revitalisation stage 2, including the Northern Territory Art Gallery, sheltered walkways, central heart shade structure and public art
• D1 Data Centre in Darwin
• Lasseters Hotel Casino redevelopment in Alice Springs.

These services are also expected to benefit from the development of the Middle Arm Sustainable Development Precinct and defence infrastructure projects.

Additionally, there are a number of large construction projects proposed that, if final investment decisions are achieved, will boost and sustain service industries in the Territory in the future. For further information on these projects see Chapter 2 Economic Growth in the 2023-24 Northern Territory Economy publication.

Large construction projects are also expected to contribute to population growth with significant workforce demand. Population growth will support greater demand for a wide range of services across the Territory such as electricity, gas, water and waste services, and rental, hiring and real estate services.

For the latest data on the services industries, refer to the Territory Economy website.