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Westpac Index Signals Sluggish Growth, Questions If Slow Enough


The Westpac leading index fell 0.03% m/m in October after rising 0.06%. The 6-month annualised rate was steady at -0.4%, signalling that growth is likely to remain below trend but still positive heading towards mid-2024, which is consistent with the RBA’s November forecasts. The measure tends to lead detrended growth by 3 to 9 months.

  • Westpac estimates that currently trend growth is above 3% given that the population is rising at about 2.4% y/y.
  • There has been some improvement in the 6-month rate since its May trough driven by the widening yield spread, steady dwelling approvals and some recent rises in AUD commodity prices. But hours worked and ASX equities have weighed on the index.
  • Westpac notes that while growth looks likely to stay lacklustre, the RBA is concerned whether it is soft enough to bring inflation back to target by end 2025. So, it sees the 2024 meetings as “very much live”.
  • See Westpac’s report here.
Australia Westpac leading index vs GDP y/y%

Source: MNI - Market News/Refinitiv

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