PROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES, 2015-16


INTRODUCTION

As part of the Economic Activity Survey (EAS), the ABS collects detailed information from a rotating program of industries. For 2015-16, the EAS collected additional information from Australian businesses/organisations classified to the Professional, scientific and technical services (PST) division of the Australian and New Zealand Standard Industrial Classification, 2006 edition (ANZSIC) (cat. no. 1292.0).

A data cube 'Professional, scientific and technical services, 2015-16' is available under the Downloads tab and presents detailed industry information for key data items, and summary data by business size and at the state and territory level.


KEY FIGURES, PROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES, 2015-16

ANZSIC Class	Employment at end June	Wages and salaries	Sales and service income	EBITDA(a)	Industry value added	Capital expenditure	Wages and salaries per employee
	no.	$m	$m	$m	$m	$m	$'000
6910 Scientific research services	24 141	1 941	^3 393	-925	2 388	^155	82.8
6921 Architectural services	40 153	2 347	5 853	^1 142	3 942	*299	67.0
6922 Surveying and mapping services	15 853	1 053	3 028	^615	1 872	*262	73.3
6923 Engineering design and engineering consulting services	132 498	12 422	40 476	*3 141	17 889	^1 383	99.4
6924 Other specialised design services	30 479	1 191	4 984	^976	2 384	^173	51.7
6925 Scientific testing and analysis services	18 539	1 272	3 099	*468	1 949	*197	np
6931 Legal services	104 429	5 814	18 991	6 364	13 506	^462	65.8
6932 Accounting services	132 381	7 390	18 798	4 905	13 738	^913	65.1
6940 Advertising services	43 452	3 269	12 196	^1 755	5 602	1 419	81.5
6950 Market research and statistical services	^13 621	806	^2 811	^383	1 329	^191	64.0
6961 Corporate head office management services	22 247	3 720	5 492	np	**877	1 169	np
6962 Management advice and related consulting services	156 358	8 977	27 093	^4 166	14 642	^1 240	65.7
6970 Veterinary services	^23 277	1 037	3 126	^686	1 911	**278	47.5
6991 Professional photographic services	8 855	^184	844	*146	^373	*74	41.7
6999 Other professional, scientific and technical services n.e.c.	9 470	369	^1 299	np	^781	^62	44.7
7000 Computer system design and related services	196 899	17 664	45 921	^4 568	25 189	1 613	95.7
Total professional, scientific and technical services	972 650	69 455	197 404	24 703	108 371	9 889	79.7
^ Estimate has a relative standard error of 10% to less than 25% and should be used with caution.
* Estimate has a relative standard error of 25% to 50% and should be used with caution.
** Estimate has a relative standard error greater than 50% and is considered too unreliable for general use.
np not available for publication but included in totals where applicable
(a) Earnings before interest, tax, depreciation and amortisation.
Source: Australian Industry, 2015-16 (cat. no. 8155.0)

SUMMARY OF FINDINGS

The PST industry is a significant contributor to the Australian economy, with employment levels reaching 972,650 people as at end June 2016, making it the fourth largest industry by employment. Furthermore, the industry value added (IVA) has grown to $108.4b in 2015-16, an increase of 51.2% since 2006-07, contributing 10.0% to the IVA of Total selected industries in scope of the EAS (see Endnote). On most measures, the Computer system design and related services industry is the largest ANZSIC class within the PST industry. Other significant classes within the PST industry include Engineering design and engineering consulting services, Management advice and related consulting services, as well as Accounting services and Legal services.

In 2015-16, 79.5% of PST businesses made a profit compared to 80.7% in 2014-15, and ahead of the average of 79.0% for Total selected industries. The profit margin for the PST industry in 2015-16 was 22.2%, down from 23.0% in 2014-15, however still comparatively high to the Total selected industries figure of 10.9%.




SALES AND SERVICE INCOME

Sales and service income for the PST industry in 2015-16 was $197.4b, an increase of 2.9% from 12 months earlier. Of this sales and service income, 89.7% ($177.0b) was service income, with the remainder (10.3%) coming from sales of goods. Computer system design and related services businesses accounted for 23.3% of sales and service income, largely composed of IT consulting, computer support services, customised software design, and sales of goods such as computer hardware. Engineering design and engineering consulting services contributed 20.5%, followed by Management advice and related consulting services (13.7%), Legal services (9.6%), and Accounting services (9.5%). These five industry classes comprised 76.6% of total sales and service income for the PST industry. The smallest contribution was made by Professional photographic services at 0.4% ($844m) of total sales and service income.

Businesses in the Advertising services industry contributed 6.2% ($12.2b) of total sales and service income, with most income derived from media buying, planning and placement services ($4.4b) followed by advertising agency services ($4.0b). Of the $8.4b generated by these two activities, 36.1% was through digital content and platforms.

The Accounting services industry contributed 9.5% ($18.8b) of total sales and service income, with 73.9% derived from accounting services and 26.1% derived from other activities, the largest being management advice and consulting services (excluding financial and computer consulting) (15.9%). Finer level data on sources of income obtained in the survey are available on request, subject to confidentiality and sampling variability constraints.


EXPENSES

In 2015-16, total expenses for the PST industry were $184.6b, a growth of 4.2% since 2014-15. Selected labour costs were the largest source of expenditure at $76.2b (or 41.3% of total expenses), which included wages and salaries expenses of $69.5b (37.6%). This is followed by other selected expenses ($74.3b or 40.2% of total expenses), of which $20.8b were from consultant, contractor and subcontractor payments for purchased professional services.

Purchases of goods and materials only account for 13.9% ($25.6b) of total expenses in the PST industry, compared to 45.9% for Total selected industries. This is primarily driven by a few classes, including Engineering design and engineering consulting services which contributes $8.8b (34.4%) to total purchases of goods and materials, and Computer system design and related services, which contributes $6.9b (27.1%) and includes computer hardware and 'off the shelf' software that is resold.

Overall, interest expenses comprise a small proportion of total expenses in the PST industry ($4.8b or 2.6%). Corporate head office management services contributes $3.2b (or 66.3%) to the total interest expenses.

Finer level data on expenditure obtained in the survey are available on request, subject to confidentiality and sampling variability constraints.


EMPLOYMENT

At end June 2016, there were 972,650 people employed in the PST industry in Australia, an increase of 1.4% since end June 2015. Computer system design and related services employed the most people in the PST industry (196,899 people or 20.2% of total PST employment), followed by Management advice and related consulting services (156,358 people or 16.1%), and Engineering design and engineering consulting services (132,498 people or 13.6%). It should be noted that employment is taken point in time as at the last pay period in June 2016, and can be affected by seasonal factors.

Of the total PST industry employment, 871,112 were employees and 101,538 were working proprietors and partners of unincorporated businesses. Classes with higher proportions of working proprietors and partners include Professional photographic services (50.3% of total employment for this class), Other specialised design services (24.4%), Legal services (15.4%) and Accounting services (14.2%).




WAGES AND SALARIES

Wages and salaries for the PST industry were $69.5b in 2015-16, contributing 12.9% of the wages and salaries for Total selected industries. The average wages and salaries per employee in the PST industry was $79.7k, which compares with an average of $56.2k across Total selected industries. However, there is considerable variation in the wages and salaries per employee across the classes in the PST industry. The highest wages and salaries per employee were in Engineering design and engineering consulting services ($99.4k), Computer system design and related services ($95.7k), and Scientific research services ($82.8k). The lowest wages and salaries per employee are found in Professional photographic services ($41.7k) and Other PST ($44.7k), which includes businesses/organisations engaged in activities such as meteorological, translation and interpretation services. It is also important to note that these estimates are calculated based upon a point of time employee figure, compared with annual wages and salaries expenses. Therefore, average wages and salaries per employee ratios may be influenced by seasonal factors, or a higher proportion of casual or part-time employees in certain industries. The ratio excludes working proprietors and partners of unincorporated businesses.


PROFIT MEASURES

Earnings before interest, tax, depreciation and amortisation (EBITDA) totalled $24.7b for the PST industry in 2015-16, falling by 4.2% on 12 months earlier. In 2015-16, Legal services was the largest contributor to EBITDA with $6.4b, followed by Accounting services ($4.9b). Businesses in the Veterinary services field reported an EBITDA level of $686m, and a profit margin of 20.9%. Scientific research services was the only industry to record a negative value for EBITDA (-$925m) in 2015-16. For more information on these different profit measure definitions please see the Glossary.


CAPITAL EXPENDITURE

Total capital expenditure in the PST industry in 2015-16 was $9.9b, with the largest portion (34.6%) of spending directed toward plant, machinery and equipment at $3.4b, including $1.2b of capital expenditure on computers and computer peripherals. In addition, there was $2.8b capital expenditure on computer software in the PST industry, or 28.6% of the total.


BUSINESS SIZE

The PST industry is characterised by the role of working proprietors, partnerships and contracted services which is reflected by the contribution of micro business (0-4 people) and other small businesses (5-19 people). In 2015-16, micro and other small businesses contributed the majority of total employment (52.9%) in the PST industry, in contrast to 44.3% contribution across Total selected industries. In terms of wages and salaries, micro and other small businesses are under-represented accounting for only 34.9% of the $69.5b total in the PST industry. Working proprietors and partners of unincorporated businesses rely on drawings of profits as a source of income.




STATES AND TERRITORIES

New South Wales (NSW) is the largest source of employment, wages and salaries, and sales and service income within the PST industry. NSW employment at end June 2016 was 372,788 people (38.3% of the PST Australian total), wages and salaries were $27.1b (39.1%) and sales and service income was $75.1b (38.1%). Wages relative to employment are above average in Western Australia, Australian Capital Territory, NSW and Northern Territory, while they are below average in Queensland, Victoria, South Australia and Tasmania.

The PST industry comprises two subdivisions; the largest being PST (except computer system design and related services) which accounts for 79.8% of total employment (775,752 people) and 76.7% of sales and service income ($151.5b), with the second Computer system design and related services subdivision making up the difference. There is however, considerable variation of this split between the states and territories. For example in the Northern Territory, PST (except computer system design and related services) accounts for 90.3% of employment (7,526 people), and 87.5% of sales and service income ($1.1b).


QUALITY INDICATORS

An expanded sample of 2,832 businesses/organisations received an extended EAS questionnaire to produce detailed estimates on the economic contribution and financial performance of the PST industry. There was an 86.2% response rate from all businesses that were surveyed and found to be operating during the reference period. Data were imputed for the remaining 13.8% of businesses. For more information please see the Explanatory Notes.


ENDNOTE

Total selected industries in scope of the EAS exclude Financial and insurance services and most of the General Government sector. For more information on scope and coverage see the Explanatory Notes.