April 8 links: Commodity peak

Dear reader,

I’ll being going off grid for the next week. Links will be still be available, compiled by Delusional Economics. I’ll still be posting but probably not in the morning’s. Back soon. David

David Llewellyn-Smith

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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Comments

  1. And yet the jobs number was a blowout which just doesn’t fit with the Uren/MB thesis of a flatlining domestic economy.

    Can you guys make it your goal to unravel this mystery? Peter Martin did some digging recently which revealed that health & welfare employment was growing 3x faster than mining. Even employment growth in mining-related sectors such as construction was underwhelming.

    http://www.petermartin.com.au/2011/03/we-need-workers-for-mines-just-not-that.html

    Mining might be powering Australia’s economy, but it’s employment needs are tiny.

    New figures show that in the year in which 302,000 extra jobs were created the mining industry added 27,300. By contrast the biggest-employing sector, health and social assistance, piled on 91,500 extra workers; retail 49,300 and transport and postal services 34,000

    Even as a proportion of workers employed the growth in mining of was eclipsed by real estate which expanded its workforce 21 per cent or 35,600 workers to mining’s 16 per cent.

    The detailed employment figures prepared by the Bureau of Statistics show that as hard as the mining industry is finding it to get skilled workers its needs are modest. As of last month it employed 1.7 per cent of the Australian workforce.

    So what is going on? I saw several reports last night suggesting that mining was driving employment growth. This is manifestly incorrect, but the perception remains.

    Of course the money hose from China and mining investment is spilling over into the wider economy, but surely that would be reflected in construction employment, not health and welfare?

    • Boom employment in mining is in the infrastructure construction phase – and related activities. Fully operational mines often run minimal staff levels. This is something many don’t understand and why detractors often deride mining’s contribution to employment. Construction on some of the big projects in WA (Pluto, Cloudbreak, BHP Hub, Cape Preston et al) employed thousands of contractors, mini donga cities dotted around the landscape – and when(?) the new projects are fully underway (Oakajee, Gina Rineheart’s Roy Hill, FMG Chichester, James Price Point, Gorgon) many thousands will be employed, often for a number of years, and at moderately attractive wage levels. Peter Martin should be aware of the importance of infrastructure development in mining and incorporate that in his analysis. Not to do so when call yourself an economist betrays your understanding of the interconnectedness of economic activity – nothing more than a number cruncher.

      This chart from the WA State Development Office gives some idea of the scope of current and future projects (does not include the vast number of smaller projects ongoing or proposed). Note that estimates of construction and operational staffing are given. And be awed at the size and number of projects. Just hope that China keeps ticking over.
      http://www.dsd.wa.gov.au/documents/Significant_Resource_Mar2011.pdf
      Where would this country have landed post GFC without mining?

      • I think Peter Martin is more than aware that infrastructure construction is where a lot of the mining-related jobs are/will be created. Hence his surprise that construction employment appears to be sluggish.

        Does anyone have some hard numbers on the breakdown of mining-related construction jobs (presumably growing rapidly) and housing-related construction jobs (presumably flat to falling).

        Even looking at the WA jobs numbers its hard to discern a trend because the Perth real estate market is in the toilets, WA is supposedly in a technical recession, but up north everything is going gangbusters.

  2. Nice one 3d1k. I only quibble on your last point and would change it to where would Australia have landed post GFC without China. There’s a difference between benfiting from someone else’s good planning and making your own entrepneurial leap forward.

    • Was China’s post-GFC credit/investment boom really a case of “good planning”? I guess time will tell.

    • H&H – Fair point! (Did squeeze “let’s hope China keeps ticking over” well aware that it that clock stops…everything stops)

  3. FYI – Administrative issue, not sure where else to post. Made several attempts to comment on other posts – comments disappear into the ether! Is it you or me?