Westpac comments on the data.
- 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, rose slightly to -0.50% in August from -0.56% in July
- Leading Index growth rate still negative at –0.5%.
- Negative reads have now persisted since August 2022.
- Indicator correctly predicted growth slowdown in 2023.
- Growth outlook for next 3–9 months remains poor with per capita GDP declines likely to continue.
WPAC also include their outlook for the next Reserve Bank of Australia meeting, which is on October 3:
- The Board is almost certain to hold rates steady for another month.
- In the minutes to the September Board meeting it was again noted that “… some further tightening in monetary policy may be required should inflation prove 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 overall tone of the minutes, it seems that the ‘hurdle’ for a further rate hike will be high and certainly not consistent with our current forecasts for inflation.
