The Westpac/Melbourne Institute leading index for June, which measures economic growth six to nine months in the future, decreased 0.1 points in the month.

Although this was the third consecutive month of slowing growth, the expansion remains strong even by historical standards. The long-term trend for Australia’s economic growth averages 3.2%, while the leading index shows growth closer to 6.0%, down from the peak earlier this year of 9.1% and May’s reading of 7.4%. The 6.0% annualised growth currently reflected by the leading index remains above the level of growth forecast by Westpac’s economic staff.

“In absolute terms the growth rate of the Index is still high,” said Bill Evans, chief economist with Westpac. “But it has clearly peaked.”

The coincident index, which measures the economy’s current rate of growth, improved to 3.8% in June from May’s reading of 3.4%, also above the long-term trend of 3.2%.

“This is the second consecutive month that the growth rate is above trend,” said Mr. Evans, “pointing to a very solid growth performance for the economy in the June quarter. Indeed, Westpac is currently forecasting GDP and domestic final demand to both register an annualised growth rate of 4.8% in the June quarter.”

The estimate by the Westpac economic team for actual growth in 2010 is 3.5%, higher than the Reserve Bank of Australia’s estimate of 3.25%. For 2011 and 2012, Westpac expects steady growth of 3.4%, while the RBA is calling for 3.75% and 4.0%, respectively.

Mr. Evans confirmed that Westpac is forecasting further monetary tightening in 2011, which may restrain economic growth to the RBA’s estimates.

Source: http://www.businessspectator.com.au/bs.nsf/Article/Economic-growth-slowing-survey-pd20100818-8F2F2?OpenDocument&src=hp12