Australia: Leading Index growth rate continues to fall - Westpac

Bill Evans, analyst at Westpac, notes that the Australia’s six month annualised growth rate in the Westpac– Melbourne Institute Leading Index, fell from –0.29% in December to –0.43% in January.

Key Quotes

“Over the eight months from September 2017 to April 2018 the growth rate averaged +0.78%. In the nine months since April the growth rate has averaged only +0.10% – a clear step down.”

“Westpac expects that the growth momentum for the full second half of last year will come in at around 1.5% – well below trend and lower than indicated by the Leading Index but certainly consistent with the step down in average growth over the last eight months.”

“The growth pace in 2019 is expected to fall from the annual rate in 2018 of 2.7% to 2.6%.”

“This slowing growth environment is clearly emphasised by the Reserve Bank’s growth revisions in its February Statement on Monetary Policy where it lowered its growth forecast for 2018 from 3.5% to 2.75% and the 2019 forecast from 3.25% to 3.0% - still notably above trend and well above Westpac’s forecast.”