Bill Evans, analyst at Westpac, points out that the Australian economy’s six month annualised growth rate in the Westpac–Melbourne Institute Leading Index, fell from +0.42% in November to –0.27% in December.
“This latest print for the Index growth rate extends a period of choppy performance. Last month we were surprised with the lift in the growth rate to +0.43% (revised back to +0.42%) and the specific print for December is more in line with our own growth expectations.”
“However despite these choppy results the major trend is consistent with our view that growth has slowed from a solid above trend pace to at or below trend going forward.”
“Over the eight months from September 2017 to April 2018 the growth rate averaged +0.78%. In the eight months since April the growth rate has averaged only +0.16% – a clear step down.”
“The growth pace in 2019 is expected to fall from the annual rate in 2018 of 3.0% to 2.6%, both rates are well short of the Reserve Bank’s current outlook of 3.5% in 2018 and 3.25% in 2019, set out in its November Statement on Monetary Policy.”