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Australia: Leading Index growth rate drops – Westpac

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.

Key Quotes

“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.”

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