Australia | May 28 2008
By Rudi Filapek-Vandyck
Westpac economists report the annualised growth rate of the Westpac-Melbourne Institute Leading Index of Economic Activity, designed to indicate the likely pace of economic activity three to nine months into the future, was 3.3% in March. This is not only well below the index’s long term trend of 4.4%. but also the lowest read since March 2004.
The annualised growth rate of the Coincident Index was 3.4%, also below its long term trend of 3.8%.
The economists point out the index continues to point to an abrupt slowdown in economic activity in Australia. The index peaked near decade highs at 6.9% in November last year, but since then its growth rate has more than halved. The economists highlight the index is now further below trend than at any other time in nearly five years.
The level of the Leading Index rose a modest 0.5 points (0.2%) in March. Two of the four monthly components of the index increased: the real money supply, up 0.8%, and US industrial production, up 0.3%. However, growth in both of these components remains well below their November 2007 peaks, the economists highlight.
Meanwhile other components are showing sustained weakness: dwelling approvals posted a fourth successive decline in March (down 5.7%) and share prices fell for the fifth month in a row (down 3.9% to be about 20% below its October 2007 level).