Making Sense of
The Mining Boom

Size-wise, as a proportion of Australia’s economy … Manufacturing and Mining contribute more or less the same output.

 Services rival Mining on Investment However, Mining’s investment spend is currently more than three times that being spent by the Manufacturing sector.

All the media attention has mainly been focused upon this disparity. But that doesn’t really tell you the complete story — as you can see from the first of these graphs.

The combined Service sector (which includes transport, retail, finance, utilities, communications, and the like) … creates 60% of Australia’s employment opportunities, and almost half of the investment dollars.

While Mining has drawn Labour and other resources away from both the Manufacturing and Service sectors … it is Manufacturing that has suffered the most.

And because the Service sector has only marginal exposure to overseas trade and currency movements, it actually enjoys a net benefit from any Mining boom.

This would help to explain the relative economic stability of Victoria and NSW … when compared to what has occurred with the more recent gyrations for WA and Queensland.

Furthermore, this is also being reflected in the level of Office vacancies for each capital city — with Victoria having the greatest level of “definite” commitments for investment expenditure, going forward.

Bottom Line: While Australia may have been experiencing a two-speed economy between different sectors … you are also seeing a two-speed market geographically, with Commercial property:

  • The action-packed (but unpredictable) rides you’ll experience in Brisbane and Perth; and …
  • The less-exciting (but more sustainable) growth you will be able to extract from the Melbourne and Sydney markets.

Speak Your Mind