Leading Index growth rate slows: Westpac

Leading Index growth rate slows: Westpac
Leading Index growth rate slows: Westpac

Economic growth predicted in the Westpac-Melbourne Institute Leading Index is stuck below trend, with growth in the Australian economy in the first half of 2016 under expectations.

The Index, which predicts the likely pace of economic activity three to nine months into the future, decreased from –0.13% in October to –0.21% in November. 

Westpac chief economist Bill Evans said components of the Index which have contributed to the slowdown are: ASX 200 (–0.38 percentage points); dwelling approvals (–0.13 ppt’s); yield spread (–0.37 ppt’s); and aggregate monthly hours worked (–0.17 ppt’s). 

"This result is a little disappointing. In the two previous months we had seen some modest improvement in the growth rate raising hopes that growth in the Leading Index might exceed trend by year’s end," he said.

"Unfortunately, the set-back in this result leads us to the more general conclusion that growth in the Leading Index remains stuck below trend. The growth rate has now been below trend for the last five months.  

"Recall that both Treasury and the Reserve Bank are now assessing trend (or potential) growth at 2.75%. Westpac’s current forecast for 2016 entails an annual growth pace in the first half of 2016 of 2.75% (trend). The signal from the Leading Index indicates that our forecast may be somewhat optimistic. "

 
Leading Index growth rate slows: Westpac

Michael Crawford

Michael Crawford

Michael is the real estate reporter for western Sydney and loves writing about homes and the people who live in them. A former production editor and news journalist, he enjoys writing about real-world property purchases as well as aspirational buys and builds. Following a recent move from Sydney’s northern beaches, Michael now actually enjoys commuting.

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Interest Rates Economic Growth

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