An Australian index of leading economic indicators was little changed in September as dwelling approvals declined and productivity slipped.
The index, a gauge of future economic growth, fell 0.1 point to 270 from a month earlier, Westpac Banking Corp. and the Melbourne Institute said in Sydney today. The index rose at an annual rate of 4.6 percent in September, after gaining 5.8 percent in August.
Central bank Governor Glenn Stevens this month boosted borrowing costs by a quarter percentage point to 4.75 percent, saying the economy has “relatively modest amounts of spare capacity” and citing the risk of higher inflation. The Reserve Bank of Australia has raised its benchmark interest rate seven times since October 2009 to ward off inflation.
“The growth rate of the leading index continues to point to a solid pace of expansion heading into late 2010/early 2011, but that pace has slowed abruptly over the last six months,” said Matthew Hassan, senior economist at Westpac in Sydney. “We continue to see the RBA as carrying a medium-term tightening bias with a further rate hike coming in mid-2011.”
Westpac’s leading index tracks eight gauges of activity, such as 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 0.4 percent to 258.4 points in September.