Australia - Westpac Leading index for August down 0.3% m/m
- prior was +0.1% m/m, revised from flat at 0.0%
Now taking it further below its trend growth rate
- The six month annualised deviation from trend growth rate (which indicates the likely pace of economic activity three to nine months in the future) fell from -0.40% in July to -1.14% in August
Says Westpac chief economist Bill Evans:
- The indicator again suggests the economy is losing momentum
- trend growth in the economy now likely to be nearer 2.75% than 3%
- "Today's print points to a likely below trend start to next year"
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Evans on the implications for the RBA:
- The Reserve Bank Board next meets on October 6 ... little chance that the Board will decide to change policy settings
- Policy will now be focussed on the growth outlook for 2016
- This print of the Leading Index is casting some early doubt around the Bank's forecast of 3% growth for 2016
- RBA is still expecting that the unemployment rate has stabilised
- The make-up of growth seems to be more 'jobs intensive' than we may have expected, with the lift from dwelling construction, household expenditure and net services exports being particularly important
- The Board is very likely to await more evidence around the labour market and specifically the beneficial impact on the jobs market resulting from the sharp fall in the Australian dollar before it moves again
- At Westpac we do not expect any further rate movements before 2017
