Announcements of job cuts in the past week from freight and logistics companies, Asciano and Aurizon, and reports that BHP has shed another 500 jobs from its iron ore operations confirm that anaemic revenue growth and slashing costs remain pervasive market themes, particularly for companies exposed to the coal and iron ore sectors.

In the face of the 25 per cent slide in the iron ore price since mid-April, iron ore producers have little choice but to trim costs to remain globally competitive and ramp up production to boost revenues and profits.

The Bureau of Resource and Energy Economics notes that the transition of the mining boom from the investment phase to the production phase is already well underway, with the recent substantial lift in output from iron ore producers set to continue. By 2015, Australia’s iron ore production is expected to be 50 per cent higher than in 2012, thanks mainly to the expansion of production capacity in the Pilbara, whose mines are the most cost-competitive globally.

At the same time, the new capital discipline means that the mining sector is facing an imminent investment cliff. The Bureau of Statistics survey of investment intentions points to aggressive cut-backs in mining capital investment, which in 2015 is expected to be around 20 per cent below the 2013 peak.

Despite renewed weakness in iron ore prices, the medium-term outlook for iron ore demand continues to be well supported by the prospect of strong growth in infrastructure investment in China, which is very steel intensive. In its quarterly bulletin, the Reserve Bank highlights that urbanisation in China is still low by global standards, with less than 60 per cent of the population living in cities. Consequently, China still ranks poorly across a number of developmental indicators, including reliable access to water and sanitation, as well as rail infrastructure.

As more Chinese migrate from the countryside to cities, the demand for infrastructure, including basic amenities and public transport that helps to ease congestion will continue to grow strongly and support the outlook for steel and iron ore consumption. To that end, the Chinese government recently announced plans to expand the national rail network by over 7,000 kilometres in 2014, the equivalent of building two rail lines between Perth and Melbourne.

While iron ore demand is expected to remain strong, the substantial lift in production from the world’s two biggest producers – Australia and Brazil – suggests that the market will be well supplied, thus limiting the scope for iron ore prices to move back up sharply.

Against this backdrop, iron ore producers and other miners will continue to seek ways to boost productivity and reduce the size of their workforces. Indeed, after accounting for half of the growth in employment in the three years to 2012, resource-related activity has detracted from employment growth since then and this is likely to continue.

The weakness in resource-related employment has contributed to the fact that aggregate hours worked in the private sector have been stagnant for the past three years, and are barely above the pre-financial crisis peak in 2008 - which is all the more striking considering that population growth has been booming, growing by over two million in the past six years.

The recent announcements and reports of job shedding are unlikely to be the last and will only add to the persistent weakness in labour market conditions. As long as companies continue to combat anaemic revenue growth with aggressive cost cutting, the unemployment rate is unlikely to decline in the near term.