OREANDA-NEWS. Fitch Ratings says in a new report released today, that changes in construction employment would have a greater impact on Australian mortgages than the mining sector. The Australian mining and construction industries combined, make up almost 20% of Australia's GDP (10.3% and 9.0% respectively). The mining industry however, is less labour intensive, employing only 1.95% of the labour force compared to 8.9% in the construction industry.

Fitch believes that the modest mining labour force has been key to that sector having little impact on the performance of Australian residential mortgages and a further slowdown in mining is unlikely to cause a significant increase in Australia's unemployment rate.

If the Australian economy's reliance on the construction industry was to increase, mortgage performance would be affected, especially if this sector's labour force was to increase.
Fitch believes that the ratings of Australian RMBS and covered bonds benefit from geographically and industry diversified mortgage collateral, despite the fact that construction is still considered to be a bigger risk than mining for Australian retail mortgages. Fitch expects ratings to be resilient to future downturn in both sectors.

This is part of the series of Fitch's "APAC SF Chart of the Month", which highlights topical issues in the region, can be found at www.fitchratings.com or by clicking the link above.