Slowdown set to continue through 08: Economy roundup

New economic data released today suggests weaker conditions in the Australian economy are set to continue for at least the rest of 2008.

Today’s Westpac-Melbourne Institute Leading Index, a measure of economic activity over the next three to nine months, came in at just 2.8% in April, well below its long term trend level of 4%.

Although the April result represents a 0.1% lift on March, it remains a clear indicator that slower economic growth is likely to be sustained until at least the end of 2008.

Westpac bank chief economist Bill Evans says that should mean the Reserve Bank of Australia is able to keep rates on hold in the short term.

“At this stage the pace of slowdown in the economy appears to be satisfying the board,” Evans says. “Consequently, we believe no move is likely in July.”

In other economic data today, there is some good news for the country’s hard pressed tourism operators with the number of short-term overseas visitors to Australia increasing 1.8% seasonally adjusted in May.

And the value of merchandise exports into Australia increased 4% in original terms in May, perhaps reflecting the strong position of the Australian dollar at that time.

On the markets, at 11.30pm the S&P/ASX200 is up 0.4% on yesterday’s close to 5443.2 having rebounded sharply after losing more than 50 points in the first 15 minutes of trading.

The Australian dollar has also staged something of a comeback after falling to around the US93.5c mark in recent days and is trading at US94.51c at 11.30pm.