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Westpac-Melbourne Institute Leading Index Rises in July

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The six-month annualized growth rate in the Westpac-Melbourne Institute Leading Index rose to negative 0.2% in July from negative 0.4% in June, showing that the momentum is running below trend but is not particularly weak, according to a report released Wednesday.

The index indicates the expected pace of economic activity in comparison to the trend for the next three to nine months.

The July update is the seventh consecutive below-trend read on the leading index growth rate, but momentum has slightly improved since mid-year, said Matthew Hassan, Westpac's Head of Australian Macro-forecasting.

Gross domestic product growth is expected to remain positive in the upcoming quarters, although per capita growth may run close to flat.

The sub-trend leading index growth signal is mainly driven by financial conditions and the labor market, while other components show mixed contributions, he said.

The Reserve Bank is anticipated to leave the cash rate unchanged, but it is prepared to lift again if high inflation is showing signs of persistence, Hassan added.

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