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Australia Westpac-MI Leading Index Continues To Signal Lackluster Growth

Australia Westpac-MI Leading Index Continues To Signal Lackluster Growth
3/20/2012 11:00 PM ET

An indicator of Australian economic activity continued to show lackluster growth momentum in the economy for the three to nine months into the future, a survey by Westpac Institutional Bank and the Melbourne Institute revealed Wednesday.

The annualised growth rate of the Westpac-MI leading index, which indicates the likely pace of economic activity in the coming three to nine months, was 2.6 percent in January, below its long term trend of 3 percent. The index reading, however, rose to 284.1 from 282.3 in December.

"The leading index continues to show lackluster, sub-trend growth momentum in the Australian economy," Westpac senior economist Matthew Hassan said. The situation has improved from the low point in the December quarter, but the index continues to point to sluggish growth at best in the early part of 2012, the economist added.

The annualised growth rate of the coincident index, which measures the pulse of current activity, was 2.5 percent, also below its long term trend of 3 percent. "The growth rate of the coincident index also continues to track below trend, indicating patchy growth," Hassan said.

The report pointed out that the weak economic growth estimates released the day after the March Reserve Bank Board meeting and patchy reads on labor market conditions challenge the view that the economy overall is growing at around trend.

According to official data, the Australian economy expanded by a weaker-than-forecast 0.4 percent sequentially in the December quarter. Unemployment rate in Australia increased in February as employers slashed 15,400 jobs during the month.

The minutes from the central bank's March meeting revealed that policymakers see ample scope for the bank to ease policy in case of a sudden worsening in the situation in Europe.

by RTT Staff Writer

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