Australia: Loss in momentum continues – Westpac

Simon Murray, analyst at Westpac, notes that the Australia’s Westpac–Chamber Actual Composite index fell sharply to 52.9 in September from 61.5 in June as the further loss in momentum continues the weakening trend seen since mid-2018.

Key Quotes

“The softer result in the Composite was seen across all sub-components. Employment, new orders, output, backlog and overtime have now all eased back to modest levels. In particular, new orders have fallen to the softest level since 2013 - a net 6% reporting higher new orders in September compared to a net 27% in June.”

“The deterioration in conditions mirrors that of the broader Australian economy. Annual growth has slowed to 1.4%yr, the slowest pace since the time of the GFC - September 2009. Very weak private demand is being partly offset by a continued lift in public spending.”

“As with the economy overall, conditions in the manufacturing industry are mixed across different sectors.”

“The survey's Labour Market Composite, which broadly tracks economy-wide employment growth, is at 48.7. The index correctly led the uplift in employment in 2017 and identified the turning point to slower momentum in 2018. Currently, it suggests employment growth will ease over the second half of 2019.”