Westpac-Melbourne Institute Leading Index - the six month annualised growth rate comes in at +1.17%, up slightly on last month (1.14%)
- indicates the likely pace of economic activity relative to trend three to nine months into the future
- eight consecutive month where the growth rate in the Index is at or above trend
- That followed a period of fifteen consecutive months where the growth rate had been below trend
- The ongoing positive signal from the Index ... we can expect solid growth in the first half of 2017
The Leading Index growth rate .. key drivers of that improvement have been global factors ... of less importance have been the domestic components... in fact two domestic components have been a drag on the Index: aggregate monthly hours worked and dwelling approvals (note WPAC said similar things last month)
Looking ahead:
- Prospects for growth in 2018 look discouraging
- Housing construction is likely to be contracting through 2018
- Export growth will slow
- terms of trade are likely to be falling, slowing nominal income growth
- Prospects for an offsetting boost from household spending and business investment are not encouraging given the ongoing negative feedback loop from weak labour incomes to consumption and final sales
