By Jacob Greber
July 15 (Bloomberg) -- An Australian index of leading economic indicators fell in May for the first time in three months as dwelling approvals declined.
The index, a gauge of future economic growth, declined 0.2 percent to 248.2 points from 248.7 in April, Westpac Banking Corp. and the Melbourne Institute said in Sydney today. The index shrank at an annualized rate of 3.9 percent in May after contracting 4.1 percent the previous month.
Central bank Governor Glenn Stevens left the benchmark lending rate at a half-century low of 3 percent last week and said he has scope to cut further to spur demand. Australia’s joined China and India as one of the few economies to expand in the first quarter.
“This reading supports the reasonable expectation that we have passed the worst, although the index is still contracting on a six-month annualized basis,” said Bill Evans, chief economist at Westpac in Sydney.
The central bank reduced the benchmark interest rate by a record 4.25 percentage points to 3 percent between September and April.
Westpac’s leading index tracks eight gauges of activity, such as company profits and productivity, to give an indication of how the economy will perform over the next three to nine months.
Two of the four monthly components fell, including dwelling approvals, which slipped 12.5 percent. Australia’s stock market index and real money supply gained.
Westpac’s coincident index, a measure of the current state of the economy, rose 0.2 percent in May to 238 points.
To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net
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