Australia: Leading Index growth rate falls below trend - Westpac

Bill Evans, Chief Economist at Westpac, notes that Australia’s six month annualised growth rate in the Westpac–Melbourne Institute Leading Index, fell from 0.5% in July to -0.02% in August.

Key Quotes

“Over the seven months from October last year to April this year the growth rate averaged 0.89%. In the four months since April the growth rate has averaged only 0.1% – a clear step down.”

“Those readings to April were consistent with the strong, above trend momentum in the official growth figures that showed the Australian economy growing at a 4% annualised pace in the first half of 2018. However the weaker, though, volatile reads we have seen in recent months point to a slower growth pace over the second half of 2018 and into 2019.”

“Westpac expects momentum to slow to around 2.5% in the second half of 2018, which will be slightly below trend, with this slower pace to be sustained through 2019 at around 2.7%.”

“Over the six months from March to August the growth rate in the Index slowed from +0.7% to -0.02%.”

“Westpac confirms its view that the cash rate will remain unchanged for the remainder of 2018 and through 2019 and 2020.”