Business investment rebounded strongly in the December quarter, confirming comments made in recent speeches from senior Reserve Bank officials that the mining boom was back with added oomph.
Private investment rose 5.5% in the December quarter, up from the revised (down) 5.2% fall in the September quarter. The rise was more than double market estimates for a 2.0% rise in the December quarter.
And the forward estimates for capex for the rest of this financial year and 2010-11 were surprisingly strong, with the first estimate for the next financial already more than $101 billion and driven by a gathering surge in mining-related investment.
In a speech earlier this week, Reserve Bank deputy governor Ric Battellino said the mining boom could see investment in projects such as LNG, oil, iron, ore, coal, railroads, roads, etc, hit 6% of gross domestic product, more than double the level of the mining boom of the 1970s.
These figures today suggest that we are well on the way to hitting that level in the next year or so.
The Australian Bureau of Statistics figures show that the rise in vehicle purchases in the last quarter (thanks to the tax breaks for buyers from small business), helped push up investment.
While there was a 1.7% fall in the seasonally adjusted estimate for investment in buildings and structure, there was a 12.4% jump in the seasonally adjusted estimate for investment in equipment, plant and machinery.
Coupled with the solid rise in new construction work in the quarter of 2.5%, there should be a reasonable contribution to the fourth quarter growth figures to be released next Wednesday. Investment plans for the current financial year continue to grow and are now running at more than $110 billion.
The ABS said that Estimate 5 for total capital expenditure for 2009-10 is $110,636 million. The ABS said this is 0.4% higher than Estimate 5 for the 2008-09 financial year.
“The main contributors to this increase, by industry, were construction (57.1% higher than the corresponding previous estimate) and other selected services (18.7%). ”
More importantly, this estimate 6.7% higher than Estimate 4 for this financial year 2009-10. “By major industry group, the main contributors to this rise were mining (9.4%) and other selected industries (6.1%).”
And, the first estimate for the 2011 financial year is almost as big as the fifth estimate for this year at $101 billion. That was 15.3% up on the first estimate for 200910. A rise of that level would see capex topping $116 billion or more, with mining investment half that figure.
The big driver is the mining industry. According to ABS figures, mining industry investment for this financial year is estimated at about $41.3 billion, up on the fourth estimate by 9.4% (but just down on the fifth estimate for the 2009 year.
But the first estimate for mining investment for the 2011 financial year is a huge 38% above the first estimate for the current year at $49.09 billion. That’s more than 4.5% of GDP and heading for the 6% estimate that Battellino mentioned this week.
Where, that’s what I’d like to know? Apart from the gas in WA, where and what is the boom? The applications in the NT went from 180 a couple of yrs ago to 400 or so at last count. Very interesting!
Glen, if you’d write another article on where the boom will be and what and who will mine whatever in what state or territory, I’d be most grateful!
I agree with Liz45, where are all these booms located?
Surely Australians could prepare themselves to fill these jobs without the companies bringing in guest workers from overseas.
I’d be interested to know what entry level requirements are needed to join the mining industry.