Australia’s mining and resources boom is not over yet, as newly released capital expenditure figures show there is a lot more investment to come.
Official figures released on Thursday reported that June quarter new private capital expenditure rose by 3.4 per cent, seasonally adjusted, matching market expectations.
The Australian Bureau of Statistics (ABS) also released the third estimate of planned expenditure for 2012/13, which is 20.8 per cent higher than the corresponding estimate for 2011/12.
JP Morgan Australia chief economist Stephen Walters said two-thirds of the planned investment for the current fiscal year was destined for mining.
“Resources firms plan to spend another $120 billion by June 2013, he said.
“The first phase of the mining boom, the sustained rise in commodity prices that boosted growth in national income probably has ended.”
Mr Walters said the investment phase of the mining and resources boom would still be a driver for economic growth in 2012 and 2013.
“Then there is the commodity export phase to follow, although the state of the global economy will have much to say about its strength,” he said.
Last week, BHP Billiton shelved $US50 billion ($A47.89 billion) of major projects, including an expansion of its massive Olympic Dam uranium mine in South Australia.
The company blamed the commodity prices and increased operating costs.
Mr Walters said the June quarter capital expenditure data precedes the BHP Billiton decision and won’t allay fears about an end to the mining boom.
“I think the lower commodity prices go, the more projects you’re going to get deferred,” he said.
“You’re still going to get a lot of negative news but if you look at these numbers there is still a lot of spending to be done.”
CommSec chief economist Craig James said business investment plans were healthy but cracks were starting to appear.
“Mining states remain in strong shape but non-mining states aren’t investing or building new homes,” he said.
“Investment in the manufacturing sector and service industries has now fallen for three straight quarters.”
Mr James said he expected business investment in the mining sector to remain strong for some time to come but non-mining related businesses remain cautious.
“If global economies stabilise and consumers start spending again, then businesses may get their mojos back,” he said.
Mr James said the Reserve Bank of Australia could help encourage business investment with more interest rate cuts, on top of the most recent ones in May and June.
