John F. Clark 
Whilst the Australian economy recorded its biggest contraction since the worldwide financial crisis ultimate region, that’s unlikely to be repeated in the months in advance if the present-day Westpac-MI leading index is anything to go via.
However, it’s no longer precisely signaling that there are boom instances ahead either.
The survey’s six-month annualized growth rate, an indication of the probable pace of monetary activity relative to Australia’s trend increase fee searching three to nine months into the future, fell to zero. 11% in November, down from 0.51% in October.
Although a lower, the tremendous figure indicates that economic increase is in all likelihood to be above fashion — now seen at around 2.75% per annum — in the first half of-of the next 12 months.
- PARIS – MAY 17: Arsenal fan prays for success for her team before the UEFA Champions League Cup Final between Arsenal and Barcelona at the Stade de France on May 17, 2006, in Paris, France. (Photo by Shaun Botterill/Getty Images)
So, based on what the index is suggesting, the increase might be Adequate without being amazing.
“The run of 4 consecutive above-trend readings is signaling a higher outlook for the first half of 2017,” stated Invoice Evans, chief economist at Westpac. “Though it is disappointing that the increased price seems to, once again, be losing momentum.”
Inside the 15 months to August this 12 months, the index had previously printed in the poor territory, a lead indicator, funnily sufficient, for the ugly September quarter GDP report that changed into released at the beginning of this month.
Evans notes that the improvement in the indices growth price within the six months changed into nearly absolutely driven through an improvement inside the survey’s worldwide additives.
“Rising commodity prices (zero. forty-nine percent factors), the steepening of the yield curve (zero.41 percentage points) and the rise in the share market (zero.07 percent factors) have played the dominant roles,” he stated.
Offsetting the one’s improvements, he says that its home additives have truly been weakening.
“Dwelling approvals (minus zero.57 percentage points), the Westpac-MI purchaser sentiment expectations index (minus 0.13 percentage points) and Westpac-MI unemployment expectation index (minus zero.10 percentage points) have all subtracted from growth,” he said.
With the index now pointing to the likelihood of barely above trend boom inside the first 1/2 of the next 12 months, Evans says he remains cozy with his forecast for a three % GDP boom in 2017. Robot Tip.
However, that self-belief doesn’t extend to the ultra-modern treasury forecasts provided in its mid-12-month economic and monetary outlook (MYEFO) earlier this week.
“We warfare particularly with the government’s MYEFO forecast for 2016/17, which means a common quarterly increase of around 0.eight% % according to the region in December (2016), March (2017) and June (2017) quarters,” says Evans.
“That boom tempo would be around zero.five% % above-trend – a stretch especially as we see the increasing rate of the leading index slowing another time.”
