Mining crunch hits profits – rate cut expected

Financial Review (Australia)
"Reserve Bank governor Glenn ­Stevens and the Reserve Bank board are scrambling to kick-start growth amid signs the resources investment boom will start to taper off next year. One of the Reserve Bank’s worries is that exports are being hit by the strong dollar, which is being held up by purchases from central banks even as local interest rates have been cut. A group of influential academic and business economists acting as a “shadow” central bank board said the economy wasn’t in such bad shape and urged Mr Stevens to hold his nerve. But the latest data suggests the economy could fall into a deep slump during the 2013 election year unless housing construction, manufacturing and consumer spending pick up. “At the moment it looks like the non-mining economy is expanding at less than 1 per cent per annum and that’s where 85 per cent of the economy is and 97 per cent of the work,” Goldman Sachs Australia chief economist Tim Toohey said. “If you’ve got mining rolling down, and clearly the government is not going to add much to employment, the big driver has to be the non-mining side of the economy.”