Has Australian Mining CapEx Peaked? What Would That Mean For Australian Employment?

Mining CapEx in Australia posted another down quarter in 4Q13 and was down about 7% vs peak CapEx spending that occurred in 4Q12 (Chart 1). Granted, CapEx is still at a high level, but we may be seeing some of the first signs that the trend in mining investment has reversed. Indeed, when we overlay the CRB Commodity Index on Australian mining CapEx spending we observe that the CRB Index leads mining CapEx by about 5 quarters and it is clearly headed lower (Chart 2). If this trend continues it would likely put further upward pressure on the Australian unemployment rate (Chart 3).