Australian data – Westpac Leading Index for August -0.04% m/m (previously +0.01%)

Westpac comments on the data.

• The six-month annualized growth rate of the Westpac-Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to the trend three to nine months from now, increased slightly to -0.50%. in August, compared to -0.56% in July.
• The growth rate of the leading indicator remains negative at –0.5%.
• Negative readings have now persisted since August 2022.

• The indicator correctly predicted a slowdown in growth in 2023.

• Growth prospects for the next 3 to 9 months remain poor and the decline in GDP per capita is expected to continue.

WPAC also includes its outlook for the next meeting of the Reserve Bank of Australia, which takes place on October 3:

• The Commission is almost certain to keep rates stable for another month.

• In the minutes of the September Board meeting, it was again noted that “…further tightening of monetary policy may be necessary if inflation proves more persistent than expected.” In making this decision, the most critical update will be the September quarter inflation report, which will not be available until the November board meeting.

• Given the general tone of the minutes, it appears that the “hurdle” to further rate hikes will be high and certainly not consistent with our current inflation expectations.