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Released: Tuesday, June 19, 2012

The Conference Board Leading Economic Index® (LEI) for Australia declined 1.4 percent and The Conference Board Coincident Economic Index® (CEI) increased 0.2 percent in April.

  • The Conference Board LEI for Australia fell sharply in April led by a large decline in building approvals (April’s significant drop in the housing indicator was mainly due to a temporary interruption in approval processing), and there were downward revisions to the past few months as actual data for sales to inventories ratio* and gross operating surplus* for the first quarter of 2012 became available. With this month’s decline, the six-month change in the leading economic index remained negative at 2.8 percent (about a -5.5 percent annual rate) between October 2011 and April 2012, significantly down from the increase of 1.0 percent (about a 1.9 percent annual rate) during the previous six months.  In addition, the weaknesses among the leading indicators have been somewhat more widespread than the strengths in recent months.
  • The Conference Board CEI for Australia, a measure of current economic activity, increased slightly in April with all its components advancing. Between October 2011 and April 2012, the coincident economic index increased by 1.2 percent (about a 2.4 percent annual rate), up from a 0.8 percent increase (about a 1.7 percent annual rate) for the previous six months. Moreover, the strengths among the coincident indicators have been very widespread in recent months.  At the same time, real GDP increased sharply by 5.3 percent (annual rate) in the first quarter of this year, up from the 2.5 percent growth (annual rate) in the fourth quarter of 2011.
  • The Conference Board LEI for Australia continued its declining trend which started in the last quarter of 2011, and as a result, its six-month change has remained negative since November last year.  Meanwhile, The Conference Board CEI for Australia has been on a slightly rising trend, and its rate of growth has remained fairly stable so far. The recent weakening of the leading economic index and its components highlights rising risks to the expansion, especially from the exports and housing sectors. Although the economy should continue expanding, the rapid pace of its growth is not likely to continue in the near term.

LEADING INDICATORS.  Three of the seven components in The Conference Board LEI for Australia increased in April.  The positive contributors to the index — in order from the largest positive contributor to the smallest — are money supply*, share prices, and rural goods exports.  Building approvals, gross operating surplus*, the sales to inventories ratio*, and yield spread declined in April.  

With the 1.4 percent decrease in April, The Conference Board LEI for Australia now stands at 122.9 (2004=100).  Based on revised data, this index declined 0.2 percent in March and declined 0.3 percent in February. During the six-month period through April, the leading economic index decreased 2.8 percent, and three of the seven components increased (diffusion index, six-month span equals 42.9 percent).

COINCIDENT INDICATORS.  All four components in The Conference Board CEI for Australia increased in April.  The increases – in order from the largest positive contributor to the smallest – occurred in retail trade, household gross disposable income*, employed persons, and industrial production*.  

With the increase of 0.2 percent in April, The Conference Board CEI for Australia now stands at 120.4 (2004=100).  Based on revised data, this index increased 0.4 percent in March and increased 0.2 percent in February.  During the six-month period through April, the coincident economic index increased 1.2 percent, with all four components in the series making positive contributions (diffusion index, six-month span equals 100.0 percent).

DATA AVAILABILITY. The data series used to compute The Conference Board Leading Economic Index® (LEI) for Australia and The Conference Board Coincident Economic Index® (CEI) for Australia reported in this release are those available “as of” 10 A.M. ET on June 18, 2012.  Some series are estimated as noted below.

Series in The Conference Board LEI for Australia that are based on our estimates are sales to inventory ratio and gross operating surplus for private non-financial corporations, the implicit price index used to deflate rural goods exports and building approvals, and the CPI used to deflate money supply M3.  Series in The Conference Board CEI for Australia that are based on our estimates are industrial production and household disposable income.  CPI was used to deflate retail trade.

THESE DATA ARE FOR ANALYSIS PURPOSES ONLY. NOT FOR REDISTRIBUTION, PUBLISHING, DATABASING, OR PUBLIC POSTING WITHOUT EXPRESS WRITTEN PERMISSION.

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