From Westpac:
The money quotes from Westpac senior Economist Matthew Hassan:
- Stalling momentum mid-year is a concern given the recent reduction in interest rates and hopes that this would help generate a more convincing upswing in Australia’s consumer and non-mining business sectors.
- Today’s Leading Index result adds to recent evidence of disappointing growth momentum and casts more doubt over prospects for a pick-up in 2016
- Recent comments from the RBA Governor confirm that the Bank has been disappointed by recent economic data, noting that ‘the economy could do with some more demand growth over the next couple of years’ and that the RBA remains ‘open to the possibility of further policy easing’.
- That may see the RBA Board shift to an ‘explicit easing bias’ in coming meetings but this is unlikely to be acted on unless there is clear evidence that growth is likely to significantly undershoot the Bank’s forecasts for 2016
- The month also included negatives from US industrial production (-0.2%), commodity prices (-2.1% in AUD terms) and dwelling approvals (-4.4%). The S&P/ASX 200 dipped 0.2% in May with a very weak start to June (-4% month to date) suggesting sharemarket falls may become more of drag in coming months
Not exactly setting the world on fire is it? The Aussie dollar didn’t move on the release, still at 77.5 cents against the USD.
Earlier we reported that Westpac was predicting more rate cuts. This was incorrect. Westpac sees the rate cut case building.
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