In September 2024, the Westpac-Melbourne Institute Leading Economic Index for Australia remained nearly unchanged month-over-month, reflecting a persistent period of subdued economic activity. This marks the sixth consecutive month of weak performance, signaling ongoing challenges for the country’s economic growth outlook.

Slight Improvement in Growth Rate

The six-month annualized growth rate, a key indicator forecasting economic conditions three to nine months ahead, showed a slight improvement, rising to -0.15% from -0.26% in August. While this modest uptick is a positive sign, the negative reading continues to indicate sluggish growth, suggesting that Australia’s economy is facing headwinds.

RBA’s Policy Outlook

Despite the lackluster performance of the Leading Index, Westpac anticipates that the Reserve Bank of Australia (RBA) will maintain the cash rate target at its current level through both November and December 2024. However, analysts expect the RBA to shift its communication strategy, moving away from its recent emphasis on “inflation vigilance.” As economic data evolves, the central bank’s future decisions will likely be influenced by a broader range of economic factors, particularly as inflationary pressures ease.

Conclusion

Australia’s Leading Economic Index for September 2024 points to ongoing economic stagnation, with only a slight improvement in growth prospects. While the RBA is expected to keep interest rates stable in the near term, changes in its communication could signal a potential shift in policy as the economic landscape develops in the coming months.