Australia’s Conference Board Leading Index fell for the fifth consecutive month in January, printing at -0.6%. The reading is intended to forecast how the economy will perform in the next three to six months. The component measuring new building approvals led the decline, reflecting the deepening global recession and credit shortage that has steered consumers away from big-ticket purchases. In a statement accompanying the release, the Conference Board noted that “the leading index is now falling at rates not seen since 2000-01,” adding to evidence that Australia will sip into recession this year. A leading index published by Westpac Banking Corp echoed the same sentiment last week, falling to levels “consistent with contracting economic activity.” Australia’s GDP unexpectedly shrank -0.5% in the fourth quarter, the first negative print in 8 years, with a recession confirmed should the economy contract again in the three months to March. Minutes from the last policy meeting of the Reserve Bank of Australia said the central bank has “flexibility” to cut interest rates further, with overnight index swaps pricing in 25-50 basis points in easing over the next 12 months.
