Australia: Leading Index well below trend – Westpac

Bill Evans, analyst at Westpac, notes that Australia’s six month annualised growth rate in the Westpac– Melbourne Institute Leading Index, fell from –0.24% in August to –0.92% in September.

Key Quotes

“The growth rate is now materially below trend and is signalling that growth through the first half of 2020 is likely to remain below trend. That profile is broadly consistent with Westpac’s forecasts which have growth in the first half of 2020 at an annualised pace of 2.4% consistent with the overall growth pace in 2020 of 2.4%.”

“This forecast contrasts with the Reserve Bank’s current forecast of 2.8% although that forecast may be revised when the Bank releases its new forecasts on November 8.”

“The Leading Index growth rate has deteriorated over the last six months from –0.56% in April to –0.92% in September.”