The resources boom is lying in wait, ready to re-emerge in coming months as the mining sector gains renewed confidence.
Coming on top of solid retail sales, the big Gorgon gas project, growing confidence among consumers and business, and the gathering home building boom, plus rising home sales and prices, the Australian economy is rapidly moving towards a solid rebound in 2010.
The stronger-than-expected capex figures and better construction figures yesterday, indicate the underlying strength of two major sectors of the economy.
It suggests that the chances of unemployment rising past 7%-7.5% are fading rapidly, and that we could see a rate rise from the Reserve Bank sooner than we expect if these figures are repeated in coming quarters.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
Mining was the engine room of the Australian economy from around 2004 to 2008 after we rode the China boom to its peak, and then down again in the second half of last year after being hit by the credit crunch and global recession.
Now its gathering itself for a return to strong growth in the second half of the current financial year and there are even signs of renewed activity in manufacturing.
Projects like the $42 billion Gorgon gas project, other gas projects in WA and Queensland and talk of new coal and iron ore spending, will add to the feeling that the boom is returning, as do new private capital spending figures released by the Australian Bureau of Statistics this morning.
The ABS said new private capital expenditure rose 3.3%, seasonally adjusted and in real terms, in the June quarter, sharply better than the gloomy expectation for a 5% fall from market economists.
Wednesday’s figures from the ABS for construction spending spending showed a flat result for the June quarter, (down just 0.1%) when the market had been looking for tipping a 4% fall.
Both figures add to the feeling that economic growth for the second quarter (to be confirmed next Wednesday) will be better than expected, and that there could be a small upgrade to the March figure.
The ABS said new capital spending topped $100 billion for the first time ever in the year to June 30, with a 16.9% rise to $101.134 billion. While impressive, earlier projections had the figure running closer to 4120 billion, but the credit crunch and recession forced a lot of projects to be slowed, or abandoned.
The Bureau said that the third estimate for 2010 financial year was $90.557 billion, 10.4% lower than the third estimate for the 2009 year.
A couple of years ago a figure around that level for the full year would have been regarded as a boom.