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Westpac Lead Index Signals Weak But Positive Growth

AUSTRALIA DATA
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The Westpac leading index fell 0.05% m/m in March with the 6-month annualised rate at -0.2% after being flat the previous month. This rate leads detrended growth by 3 to 9 months and so is signalling subdued but positive growth continuing into H2 2024, which the RBA has in its latest forecasts. It expects Q4 growth to be 1.8% y/y after 1.3% in Q2. Westpac expects the Board to be on hold in May.

  • Westpac continues to forecast 2024 GDP growth of 1.6% similar to 2023 but below trend at around 2.5% y/y.
  • The improvement in the 6-month rate since September has been due to equities, unemployment expectations and commodities in AUD. The latter though fell 5.1% m/m in March and may be at a turning point. The yield spread, US IP and dwelling approvals were all a drag.
Australia Westpac leading index vs GDP %

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The Westpac leading index fell 0.05% m/m in March with the 6-month annualised rate at -0.2% after being flat the previous month. This rate leads detrended growth by 3 to 9 months and so is signalling subdued but positive growth continuing into H2 2024, which the RBA has in its latest forecasts. It expects Q4 growth to be 1.8% y/y after 1.3% in Q2. Westpac expects the Board to be on hold in May.

  • Westpac continues to forecast 2024 GDP growth of 1.6% similar to 2023 but below trend at around 2.5% y/y.
  • The improvement in the 6-month rate since September has been due to equities, unemployment expectations and commodities in AUD. The latter though fell 5.1% m/m in March and may be at a turning point. The yield spread, US IP and dwelling approvals were all a drag.
Australia Westpac leading index vs GDP %

Keep reading...Show less