An Australian index of leading economic indicators advanced in December as gains in money supply and U.S. industrial production outweighed declines in stocks and dwelling approvals.
The index, a gauge of future economic growth, rose 0.5 percent from a month earlier to 283.4, Westpac Banking Corp. (WBC) and the Melbourne Institute said in a statement in Sydney today.
Reserve Bank of Australia Governor Glenn Stevens unexpectedly paused interest-rate reductions this month, after cutting at back-to-back meetings late last year, on optimism Europe will contain its fiscal problems and the domestic economy will strengthen. Australia recorded its weakest jobs growth in 19 years in 2011 as a stronger currency, fueled by a A$456 billion ($486 billion) pipeline of resource projects, hurt the nation’s manufacturing and services industries.
“We still expect the current easing cycle to see further rate cuts as global growth concerns reemerge and domestic fragility becomes more apparent across non-mining sectors and the labor market,” said Matthew Hassan, a senior economist at Westpac who predicted the central bank to lower rates in May.
Westpac’s leading index tracks eight gauges of activity, including company profits and productivity, to give an indication of how the economy will perform over the next three to nine months. The coincident index, a measure of the current state of the economy, rose 0.1 percent in December to 270.6, the bank said.
To contact the editor responsible for this story: Stephanie Phang at email@example.com