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Via Westpac:
• The six-month annualised growth rate in the Westpac Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, eased from 3.31% in March to 2.85% in April.
The Leading Index growth rate continues to point to strong above trend growth momentum carrying through the second half of 2021 and into early 2022. While the pace of gains has moderated, this is coming from an extremely strong starting point after the Index growth rate hit record highs late last year. April’s read may be down on those peaks, but it is still above all other growth rates recorded since the early 1980s.
MacroBusiness
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Westpac with the note:
The growth rate of the Leading Index continues to point to above trend growth in 2021. Westpac is forecasting growth of 4.5% in 2021 largely driven by the consumer who is expected to contribute three of those percentage points.
The reopening of the economy; cashed up households; and an eleven year high in Consumer Sentiment all point to strong spending.
The housing market is booming. Westpac expects dwelling price growth of 15% in 2021 along with surging dwelling construction.
The Treasurer announces the Federal Budget on May 11. The Budget is unlikely to focus on fiscal repair. Despite recent encouraging progress, the unemployment rate is too high and well above the full employment level which is likely to be below 4%.
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