Australia Westpac leading index six-month annualized growth rate declined from -0.33% to -1.15% in September. It’s now at the weakest level since the pandemic first hit in 2020, and prior to that, since early 2016. The index continued to point to a “material loss in momentum to a below-trend growth pace heading into 2023.”
Westpac added that the signal in broadly in line with forecast that economic growth will slow from 3.4% in 2022 to 1.0% in 2023, with sharp slowdown in consumer spending. It said, “that slowdown is likely to intensify through 2023 as rising interest rates and a softening labour market take their toll.”
On RBA policy, Westpac pointed to minutes of October meeting, which noted, “drawing out policy adjustments would also help to keep public attention focused for a longer period on the Board’s resolve to return inflation to target.” The thinking was in line with Westpac’s forecast that RBA will have a series of 25bps rate hikes in the future months of November, December, February, and March.