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Bill Evans, analyst at Westpac, points out that for the Australian economy’s six month annualised growth rate in the Westpac- Melbourne Institute Leading Index, declined from -0.13% in March to -0.47% in April.

Key Quotes

“The Index growth rate has been consistently negative over the last five months, a clear signal that economic growth through the three quarters of 2019 is likely to be below trend.”

“As noted last month, the improved signal in March was entirely due to a sharp lift in one component – dwelling approvals – which saw a spike in high rise activity drive a 19.1% surge. A 15.5% fall back in this component accounts for almost all – 0.32ppts out of 0.34ppts – of this month’s lapse in the Leading Index growth rate to more negative territory.”

“This consistent ‘below trend’ signal from the Index is in line with Westpac’s growth forecast for 2019 of 2.2%. We note that the Reserve Bank has recently lowered its growth forecast for 2019 from 3% to 2.6%. That adjustment is in the right direction and is official recognition that growth in 2019 will be below trend (generally accepted as around 2.75%).”