Mining Boom Manufacturing Doom – WA

Currently in Western Australia for a family wedding and notice that the workforce here is undergoing a significant change. The numbers employed in the manufiacturing sector is likely to be elcipsed by the number employed in the mining industry. Have a look at these figures:

2008 – Manufacturing 105,000 – 70,000 mining
2010 (Aug) – Manufacturing 87,700 – 86,900 mining

The commodity boom has simply led to resources flowing from one part of the economy to another. The labour market is allocating its resources in a more efficient and wealth maximising manner. However with the continued rise of the AUS$ the manufacturing sector is finding it increasingly hard to compete and it is difficult to make things when a nation’s capital, labour force and financial resources are focused on the resources sector to capitalise on high prices. It sounds very like a case of ‘The Resource Curse’ – click here to see earlier post on this topic. The Reserve Bank of Australia (RBA) worried about another commodities boom are suggesting a rise in interest rates. This might not impact the mining sector but it will definitely affect manufacturing.

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