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Australia Leading Index Continues To Signal Weak Growth - Westpac
(RTTNews) - Australia's leading index remained stuck in the negative territory for the sixth successive month in January amid headwinds from global factors, monetary policy and weaker labor work hours, survey results from Westpac showed Wednesday.
The six-month annualized growth rate in the Westpac-Melbourne Institute Leading Index was largely unchanged in January, rising marginally to -1.04 percent from -1.09 percent in December.
Consequently, the leading index continued to point to weak growth in the Australian economy occurring in the next 3 to 9 months.
In line with Westpac's forecast, the economy's growth rate will remain below trend through most of 2023.
Read more: RBA Board Discussed 50 Bps & 25 Bps Rate Hikes, Minutes Show
A slowing in total hours worked, along with a sharp pullback in commodity prices, a downward trend in US industrial production, and a sharp narrowing in the yield spread, all resulted in the latest move to rapidly tighten monetary policy by the Reserve Bank.
"The Leading Index growth rate has seen a sharp deterioration over the last six months, going from running 0.76 percent above trend in July to 1.04 percent below trend in January," Westpac's Chief Economist Bill Evans said.
"Based on the Minutes from the February Board meeting and various other communications from the Bank over the last two weeks it is quite clear that the Board will decide to raise the cash rate by a further 0.25 percent at the March meeting to 3.6 percent," Evans added.
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