The Australian Bureau of Statistics published on Wednesday the March quarter data for national engineering construction, which often gives a picture of the mining construction boom’s construction to growth.
It fell 3 per cent as a result of cancelled and deferred mining projects as China’s economy slows down.
MacroBusiness editor David Llewellyn-Smith wrote in MacroBusiness the large mining projects will benefit in the future as they start producing, increasing Australia’s export volume and adding directly to GDP.
The ABS also published trade data for May, and the balance showed the highest export rates to China and a good trade surplus.
Llewellyn-Smith said this is counteracting the resource investment slump, observing that the first quarter of this year showed a similar story (last GDP figure to hand), with net exports adding to a large part of the 0.6 per cent growth. He expects this trend to continue in the June quarter.
This is indicative of a new economy where net exports can expand over the next three years but unemployment can also increase. This is because a net export-driven economy is much less employment-driven than mining investment or even housing and consumption.
This can impact career and investment choices. He recommends people remain careful about investments that are reliant on consumer spending or debt accumulation, like stocks or property.
On the plus side, he notes interest rates will remain lower for a long time. While this may hamper the old ‘interest rate-sensitive sectors’, it will help those clearing debt, and more disposable income will become available instead of leverage and asset price growth.
The second reality is the Australian dollar will continue to decline further and quicker. Llewellyn-Smith recommends people plan their finances around these two factors.
“Welcome to your new economy. I hope you like it,” he concluded.