Economic indicators point to negative growth in Melbourne but with a future upturn – except for hous

According to the Westpac-Melbourne Institute Leading Index – an indicator of the likely pace of economic activity three to nine months into the future, there has been a slight increase in negative economic activity relative to trend from – 0.16 percent in August down to – 0.21 percent in September.

Westpac’s chief economist, Bill Evans, says that while “While the Index only gives us a glimpse of the likely momentum in the first few months of 2018, it is consistent with our view of the likely growth environment next year.”

He says that in terms of actual economic activity, “Westpac is currently forecasting growth of 2.5 percent in 2018.”

However, Evans also goes on to say that, “Constraints on [economic] growth next year are likely to centre on a lacklustre consumer who struggles under the weight of weak wages growth, high energy prices and excessive leverage.”

“Conditions in housing markets, particularly in the eastern states, are likely to soften while the residential construction boom will turn down,” he says.

At the same time, Westpac says that it does not expect interest rates to rise over the course of the next 12-months.