A leading indicator of Australian economic activity continued to signal above-trend growth for the economy in the coming quarters, a report from Westpac and Melbourne Institute showed Wednesday.
The annualized growth rate of the leading index, which indicates the likely pace of economic activity three to nine months into the future, was 5.4 percent in April, comfortably above its long term trend of 3 percent. The level of the index increased 1.8 points from a month earlier to 294.0 in April.
"After a slight moderation in March, the Leading Index picked up again in April," Westpac Senior Economist Matthew Hassan said. "However we remain concerned that this above trend pace will not be sustained over the course of 2013."
Of the four monthly components of the index, three improved and one fell in April. The all ordinaries index, real money supply and dwelling approvals rose during the month.
The index rose 2.4 percentage points since November last year and the bulk of the contribution came from two components; real corporate profits and productivity. The share market rally and a slight pick-up in money supply also added to the growth, the report said.
The annualised growth rate of the coincident index, which gives a pulse of current activity, was 2.9 percent, slightly below its long term trend of 3 percent. The index rose 1 points over the month.
In another report today, the Conference Board said that its leading economic index for Australia increased 0.3 percent month-on-month in April. This was fourth increase in a row and followed a 0.1 percent rise in March.
According to the Conference Board, money supply and stock prices made the largest positive contributions to the index.
The coincident economic index also increased 0.3 percent in April following a 0.2 percent increase in March. The recent gains in both indicators continued to suggest that the rate of economic expansion could continue to accelerate in the coming months, the Conference Board said.
The Australian economy expanded at a modest pace of 0.6 percent quarter-on-quarter in the first quarter, as gains in trade and consumer spending offset a decline in business investment. Though the economy managed to retain the momentum seen in the fourth quarter of 2012, the growth was modest and was weaker than expected.
The Reserve Bank of Australia kept the benchmark cash rate unchanged in June after cutting it to record low of 2.75 percent in May. The bank has kept the door open for further easing if economic situation worsens.
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