Mining posts strong growth but low confidence

Despite far outpacing the rest of Australia confidence in the mining sector remains low following the introduction of the mining and carbon taxes, according to National Australia Bank economists.

In its latest business survey NAB said while mining was spurring significant growth in WA and far outpacing other industries confidence within the sector was falling.

"Confidence deteriorated in mining and manufacturing, possibly reflecting in part trepidation over the minerals resource rent tax and carbon tax," it said.

"Weaker commodity prices may also have affected mining confidence."

Despite business conditions rising to their highest level since April 2008, and the mining industry posting some of the strongest growth in Australia, confidence "fell heavily" in WA and Queensland also nosedived.

Marking the continued growth of the mining sector NAB said it appeared Australia's economy was also moving toward a structural shift away from manufacturing.

"The persistent divergence in industry conditions indicates that the Australian economy is undergoing a structural transformation towards mining and service-based industries, and away from traditional manufacturing and discretionary retailing," it said.

Analysts also said mining's strength was filtering through to other parts of WA but non-mining regions of Australia would not see the benefits.

"Clearly, the benefits of the mining sector have begun to spill into other non-mining related businesses in the WA economy, a benefit that Victoria is unlikely to see any time soon."

In more good news for the industry labour costs also leveled out, but instability in Europe and downgrades in Chinese growth dented the bigger picture.

Drawing attention to the divergence between mining and the rest of Australia, NAB said the "two-speed economy is very much alive," with the vast difference between Victoria in WA of particular note.

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