Leading Index points to more weak growth ahead
- Leading Index growth rate drops to –0.23%.
- Momentum likely to remain weak throughout 2024.
- Pull-back in commodity prices drives latest slowing.
- Most other components remain soft.
The six-month annualised growth rate in the Westpac-Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, fell to –0.23% in March from –0.03% in February.
Westpac Matthew Hassan, commented, “The latest Leading Index update points to Australia’s sub-trend growth performance continuing throughout 2024. Despite some improvement over the last six months, and a brief one-month lift into positive late last year, the Index growth rate has been stuck firmly below zero in early 2024. While not overly concerning – reads are a long way from the negatives seen when the economy is tipping into a recession – the persistently soft results suggest growth will remain weak over the remainder of the year.”
“The Leading Index growth rate has lifted from –0.47% in September to –0.23% currently. The 0.24ppt improvement has been driven by three of the eight components: the S&P/ASX200 (adding 0.24ppts); commodity prices, measured in AUD terms (adding 0.18ppts); and consumer unemployment expectations (adding 0.07ppts). Notably, the support coming from commodities is showings signs of turning, prices declining 5.1% in the March month, having risen 8.4% over the previous seven months.”
The report is only available to subscribers.
The Westpac-Melbourne Institute Leading Index of Economic Activity for March 2024 was released at 11am (AEDT), Wednesday 17 April 2024. The next index will be released at 11am (AEDT), Wednesday 29 May 2024.
The Westpac–Melbourne Institute Leading Index of Economic Activity report examines movements in the leading indicator of economic activity in Australia. It is designed to anticipate economic growth in the next 3 to 9 months. Further information can be found here.