Westpac with the note.
- Leading Index growth rate dips back to 0.25% but still slightly positive.
- Growth set to improve in 2025 but remain lacklustre.
- Modest lifts in commodities, consumer, equities and dwelling approvals.
While the growth signal is still not particularly strong, it has shown a clear improvement on the persistently negative, below-trend reads recorded over the previous two years.
The latest Index growth rate points to a lift in momentum over the first half of 2025. Westpac expects GDP growth to show a gradual improvement over the course of 2025, reaching 2.2%yr by year-end, a material improvement on the dismal 0.8%yr pace seen over the year to September 2024 but still a lacklustre result.
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The Main Index progress has lifted 0.37ppts since mid-2024, from –0.12% in June to +0.25% at present. Part-wise, the shift has been pushed by: stabilising commodity costs, measured in AUD phrases (including 0.23ppts to the Index progress fee); much less pessimistic expectations amongst Australian customers (including an additional 8ppts); a rally in fairness markets that lifted the S&P/ASX200 simply over 5% over the second half of the 12 months (including 0.05ppts); and a restoration in dwelling approvals from cyclical lows (additionally including +0.05ppts).
All of those part positive aspects have been comparatively modest thus far. There are additionally doubts over the extent to which they are going to be sustained into 2025. Commodity costs and monetary markets face important dangers round world commerce and geopolitics. In the meantime regionally, the buyer and housing sectors face ongoing uncertainty concerning the timing and scale of a potential rate of interest easing. All up, the extra constructive progress sign nonetheless appears to be like pretty tentative.
The Reserve Financial institution Board subsequent meets on February 17–18. The Board is turning into extra assured about attaining a sustained return to inflation within the 2–3% goal band. An extra moderation in inflation is anticipated to ultimately clear the way in which for much less restrictive rate of interest settings. Nonetheless, Westpac expects the Board to maintain the official money fee on maintain in February with an easing extra more likely to start in Could.
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The improved Main Index momentum provides to a number of the extra combined indicators round progress in latest months. Of specific significance for the RBA are indicators that the labour market ‘rebalancing’ wanted to make sure a sustained return to low inflation stalled within the second half of 2024 with situations nonetheless comparatively tight. An extra slowdown in underlying measures of inflation might nonetheless see the Financial institution ease in February or April however we suspect the RBA will must be extra snug about a few of these dangers earlier than it’s ready to start easing.

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Meh, that may be a elevate to crap from terrible. Feb reduce for mine.
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