The mining and resources sector have reminded us that they are still the big guns of the Australian economy, pushing company profits to an 18-month high in the March quarter.

Company gross operating profits rose three per cent in the March quarter, the Australian Bureau of Statistics reported on Monday.

Market forecasts centred on a 1.5 per cent rise for the quarter.

This was helped by a 9.5 per cent rise in mining and resource sector profits. Construction sector profits also rose 5.7 per cent.

JP Morgan economist Ben Jarman said a rise in commodity prices gave the mining sector some temporary relief.

“Mining profits were particularly strong, thanks to solid volumes growth, a terms of trade rise and fading capital expenditure requirements,” he said.

“The construction sector similarly delivered its best performance for 18 months which is good news for the growth rotation story, though we are getting some mixed messages on that front, so will reserve judgment on the broader trend.”

It is hoped that when mining sector investment peaks in the next 12 months, growth in the other sectors of the economy will pick up helped by a weaker currency and lower interest rates; following the theory called `rebalancing the economy’ or ‘growth rotation’.

Mr Jarman said the business indicators data won’t change the outlook for the March quarter gross domestic product figures to be released on Wednesday, which he expects will come in at 0.8 per cent.

St George senior economist Jo Heffernan said it does look like there was an uptick in Australia’s terms of trade in the first three months of the year.

“The rise in commodity prices over the quarter has significantly helped the profitability of miners,” she said.

However, since the end of March commodity prices have fallen.

“Miners may need to boost productivity or lower costs to sustain growth in profits,” Ms Heffernan said.

“That said, the recent fall in the Australian dollar may provide some partial relief for many industries.”

After spending most of the past two years above parity with the US dollar, the Australian dollar fell seven per cent in May, and is trading close to 96.00 US cents.

Ms Heffernan said St George is sticking by its forecast for 0.8 per cent GDP growth for the March quarter.

“We expect to see positive contributions to growth from consumption, dwelling investment and net exports.”