Australia | Sep 19 2007
Today’s release of the Leading Index of Economic Activity by Westpac and the Melbourne Institute makes for a sharp reversal in recent trends for economic data about the Australian economy with the economists suggesting growth in Australia may already have peaked, though there’s no immediate reason for concern.
The economists believe growth in the Leading Index is likely to have peaked in February this year at around 6.6%.
They note growth in the Index remains above long term trend but it is now sending the weakest signal for growth the economists have seen for about a year. The best take at this stage is that growth will hold at or slightly above trend for the next three to nine months, they state.
The annualised growth rate of the Westpac-Melbourne Institute Leading Index of Economic Activity, which indicates the likely pace of economic activity three to
nine months into the future, was 4.6% in July. The index’s long term trend is 4.2%.
The annualised growth rate of the Coincident Index was 4.8% which is also above its long term trend of 3.7%.
Westpac economists point out this reading of the growth rate in the Index represents a significant revision from the annualised growth rate of 7.1% originally reported for June. The source of the revisions was the June quarter national accounts data which provided updated measures for productivity and the real corporate gross operating surplus.
Despite the national accounts confirming that the Australian economy has been growing very strongly with private final demand growing by 5.7% in the year to June these key series reversed, the economists point out. Real corporate gross operating surpluses fell by 1.8% and the productivity measure dropped by 1.2%.