Australia Westpac Leading Index Growth Slows on Impact of Floods
An Australian index of leading economic indicators rose at a slower pace in April as the impact of natural disasters this year hampered growth.
The index, a gauge of future economic growth, rose 0.2 percent from a month earlier, when it climbed a revised 0.6 percent, Westpac Banking Corp. and the Melbourne Institute said in Sydney today.
Central bank Governor Glenn Stevens has held the cash-rate target at 4.75 percent for the past six meetings, the longest pause since 2007, to help Queensland state recover from torrential rains and a cyclone. A government report this month showed Australian employers cut the most full-time workers in two years in April and May, even as investment in the minerals and energy industry is forecast to drive the nation’s economy.
“The scale of the impact of weather disasters on the economy’s ongoing growth momentum is becoming more apparent,” said Matthew Hassan, senior economist at Westpac in Sydney. “The good news so far is that even with the negative hit, the growth rate in the leading index does not appear to be so low as to be of major concern.”
The Australian government forecasts mining investment of A$76 billion ($80 billion) next fiscal year as companies including BHP Billiton Ltd., the world’s No. 1 mining company, expand output to meet demand from China and India. The buildup has spurred hiring and prompted the RBA to predict the unemployment rate will fall to 4.25 percent by December 2013.
Australia recorded its biggest annual job growth on record last year before hiring cooled in the first quarter. The nation’s economy shrank 1.2 percent in the first quarter, the most since 1991, as floods slashed coal exports.
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. It climbed to 280.6 in April from 280 in March.
The coincident index, a measure of the current state of the economy, rose 0.1 percent to 265.2 in April.
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