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Mining boom provides another fillip
Clancy Yeates
October 23, 2010

THE mining export bonanza has given the economy another boost in the latest quarter, helping Australia to dodge the gloom enveloping other parts of the developed world.

Export prices surged 27.7 per cent in the year to September, Bureau of Statistics figures showed yesterday, after stronger than expected price rises in the bulk commodities of coal and iron ore.

Over the quarter, export prices were up 7.8 per cent, after a record surge of more than 16 per cent during the previous June quarter.

Advertisement: Story continues below Australia's bumper trade performance - driven by China's voracious demand for minerals and energy - is a key reason the country's employment performance has been much stronger than other rich countries.

The boom in export prices has generated a surge in national income, because it means the economy can afford a greater quantity of imports with the same level of exports.

Highlighting this jump in the economy's purchasing power, import prices slumped 1.5 per cent over the year, helped by the steady rise in the dollar.

The rapid expansion of economic activity has meant a sharp increase in demand for skilled labour, which is already in short supply in the mining boom states of Western Australia and Queensland.

The unemployment rate, at 5.1 per cent, is expected to edge down further in the year ahead the mining boom gathers momentum.

''This is yet more evidence that the surge to national income from higher commodity prices continues to flow into the economy,'' an economist at J.P. Morgan, Ben Jarman said.

''That's going to have very important consequences for earnings in the mining sector and also the budget balance.''

Despite some recent jitters about slowing demand in China, the ABS said metal ore prices were up 14.6 per cent in the quarter and coal prices were up 17.4 per cent.