With global demand for resources strong and prices high, the resource sector is prominent in the pick-up in investment, but other sectors too are responding to the need for more capacity. Business profitability, though squeezed in some areas by rising costs of materials and labour, remains in good shape, and of course the cost of external finance remains quite favourable.
So conditions seem quite propitious for further growth in investment. Over the medium term, the resulting increase in capacity will help to accommodate good, noninflationary growth. In the short term, though, the act of adding to capacity itself adds to demand, potentially putting pressure on productive resources.