Speaking at a summit in Melbourne yesterday, RBA deputy governor Philip Lowe said mining-related activity expanded to 12% over the past year and a similar rate was tipped for the next two years.

He estimated the resources sector currently accounted for around 17% of Australia’s gross domestic product, with mining-related employment accounting for around 8% of the country’s total employment, although only 2.75% of the workforce was directly employed in mining and resources.

The balance is involved in a range of activities related to the mining boom, including construction, utilities, project management, legal services, surveying and leasing, etcetera.

However, he warned there were a number of uncertainties, foremost being the future rate of productivity growth in the non-mining economy and the ability of the labour market to effectively match workers with the new employment opportunities.

“These are both issues that we will need to watch carefully over the period ahead as we continue to assess the balance between supply and demand in various parts of the economy,” Lowe said.

“The overall conclusion from this work is that given the huge pipeline of mining investment and the currently relatively low unemployment rate, it is likely that conditions will continue to vary significantly across industries for some time to come.”

Average exports for 2011 came in pretty much on par with the RBA’s forecasts at 4.5% versus the forecast 4.75%, while average output was slower than expected, mainly due to a drop in coal production following the floods in Queensland and New South Wales.

“As a result, despite all the talk about Australia’s resources boom, the volume of resource exports increased by only 1 per cent over 2011,” he said.

“A much stronger outcome than this is likely both this year and next.”

While average demand growth was pretty close to its estimates, he said the composition of that growth contained a few surprises.

“In particular, while the RBA had long expected a very large lift in investment in the resources sector in 2011 – and this indeed occurred – the increase was even larger than had been forecast,” Lowe said.

“As one indication of the very strong outcome, the ABS [Australian Bureau of Statistics] estimates that engineering investment increased by almost 50 per cent over 2011.

“On the other hand, growth in demand not directly related to mining investment was not as strong as forecast.

“The biggest surprise was probably in terms of home building.

“We had expected dwelling approvals to pick up gradually over 2011 but this pick-up did not eventuate.”

He said another area that was weaker than expected was private business investment outside the resources sector, partly reflecting the decline in business confidence over the year, with a number of factors, including renewed concerns about the monetary problems in Europe, adding to uncertainty.