After recording stronger than expected growth in the June quarter, it appears that Australia’s economy is stalling once more.
Last week, the Westpac–Melbourne Institute Leading Index was released, which fell back to –0.16% in August from +0.11% in July.
It was the first below-trend reading since September 2024, suggesting that momentum has slowed.
“While the weakness is not overly concerning it marks a clear softening from the above-trend momentum that was evident earlier in the year”, Westpac Head of Australian Macro-Forecasting, Matthew Hassan, wrote.
“The pattern is broadly consistent with the economy slowing again after a relatively firm performance in the June quarter.
The S&P Global Flash Australia PMI has been released, which tells a similar story.
The Flash Australia Composite PMI Output Index declined to 52.1 in September, down from 55.5 in August.
The latest reading was the lowest in three months and signalled only a modest expansion in activity. By sector, output growth softened across both manufacturing and services in September.
Slower inflows of new work were central to the recent slowdown in business activity growth. While still strong, the rate of new business growth was the slowest in three months. This drop was owing to a slowdown in new business expansion for services as well as a continued decline in new orders for goods.
Anecdotal evidence suggested that goods demand declined as market conditions deteriorated. The rate at which goods new orders contracted was the fastest in eight months, despite being marginal.
Meanwhile, new export orders experienced a slight decline in September after a modest increase in August.
