The Westpac-Melbourne Institute leading indicator, which measures the trend of economic activity three to nine months in the future, printed flat in April, showing that the recent tremendous growth in the Australian economy is likely to moderate through the end of 2010.

The leading index remained unchanged in April from the March reading of 264.4. The annualised rate of growth printed 7.5%, down from the previous 8.8% but still a very strong figure and far above the long-term trend of 3.0%.

This result was echoed in the results for the coincident index, which showed an annualised growth rate of 3.9%, higher than the long-term trend of 3.2%.

Matthew Hassan, senior economist with Westpac Bank, emphasized that “the year to March saw the sharpest upturn in the leading index since the rebound coming out of the early eighties recession.” Some moderation in growth was to be expected, following the blistering pace of acceleration set during the previous ten months, and this is the first sign of such moderation.

Mr. Hassan blamed the slowing, yet still robust, pace of growth on the equities and international financial markets, which were sold off sharply in May and June. This was due, he said, to the sovereign debt crisis in Greece, Portugal, and Spain, unnerving global investors and increasing volatility in financial markets.

The moderation in Australian economic growth is likely to be seen in the leading index prints for May and June, as well, Mr. Hassan said, driven by the sell-off in equities and lower commodities prices.

Source: http://au.ibtimes.com/