Australian Economic Outlook Remains Strong: Leading Index

17 Jul 2013

Australia's economic outlook has remained strong with a leading index holding above trend growth, according to a study released on Wednesday by the Westpac Banking Corp and Melbourne Institute.

The annualized growth rate of the Westpac Melbourne Institute Leading Index, which indicates the likely pace of economic activity three to nine months into the future, was 4.9 percent in May, above its long-term trend of three percent, due to strong corporate profits and improved productivity.

Westpac Chief Economist Bill Evans said the growth rate in the index had been above trend for the last six months, after spending the previous 12 months well below trend.

"That long period of under performance in the Leading Index sent a reasonably accurate signal around the strength of the Australian economy which grew by a disappointing 2.5 percent in the year to March 2013," Evans said in a statement.

"The issue is whether we can be as confident around this new signal, that the growth pace is likely to pick up markedly from the June quarter 2013."

According to Evans, Westpac expects growth the year to the March quarter 2014 to be just 2.4 percent.

He said Westpac economists were still forecasting another interest rate cut in the Reserve Bank Board meeting on Aug. 6.

"With weak business confidence; disappointing evidence around consumer spending; a steadily rising unemployment rate; and slowing wages growth the case for another cut seems respectable," Evans said.

Source: http://www.globaltimes.cn/content/796788.shtml#.UeY149JHLfI