MNI: Australia Leading Index Signals Strong Growth Momentum

--But Westpac's Evans Thinks Headwinds Remain

     SYDNEY (MNI) - From Westpac-Melbourne Institute's Leading Index for

December published Wednesday.

                                                         December  November

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Leading Index                                               98.07     97.81

6-Mo Annualized Deviation From Trend, percentage points     +1.41     +0.66

     FACTORS: The leading index surged in December pointing to the strongest

above-trend growth momentum since January last year. The index has thus

recovered strongly from below-trend growth signal of -0.06 points in the July

index to 1.14 above trend.

     The main shifts in component contributions during this period came from

commodity prices which added 0.65% points. The other key contributions came from

dwelling approvals which added 0.20 points and consumer sentiment expectations

that added 0.29 points.

     TAKEAWAY: Westpac chief economist Bill Evans is not convinced the economy

would follow the signals from the index. In his view, there are still key

negatives around housing, household incomes and the consumer which are likely to

challenge the sustainability of any upswing in 2018.

     COMMENTS: Evans continues to expect the Reserve Bank of Australia will keep

the cash rate on hold in 2018 and 2019.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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