The Westpac-Melbourne Institute (MI) Leading Index is a composite economic indicator that is designed to predict future economic activity in Australia.
It is an important resource for investors, policymakers, and business leaders who want to better understand Australia’s economic outlook.
What is the Westpac-MI Leading Index?
The Westpac-MI Leading Index is a composite economic indicator developed through a collaboration between Westpac Banking Corporation and the Melbourne Institute of Applied Economic and Social Research.
The index measures the likely pace of economic activity in Australia, relative to the long-term trend, three to nine months into the future.
The components in the Westpac-MI Leading Index are:
- S&P/ASX 200 share price index
- Dwelling approvals
- US industrial production
- RBA Commodity Prices Index (A$)
- Aggregate monthly hours worked
- Westpac-MI Consumer Confidence Index
- Westpac-MI Unemployment Expectations Index
- Yield spread (10Y bond – 90D bill)
The index is calculated by taking a weighted average of the components. The weights are determined by how well each component has historically predicted future economic activity.
How to Understand the Westpac-MI Leading Index
The Westpac-MI Leading Index is expressed as a percentage, which represents the deviation of the index from its long-term trend.
- A positive reading indicates that the economy is expected to grow at a faster pace than the long-term trend, suggesting a period of economic expansion.
- A negative reading indicates that the economy is expected to grow at a slower pace than the long-term trend, suggesting a period of economic slowdown or contraction.
Why is the Westpac-MI Leading Index important?
The Westpac-MI Leading Index is a leading indicator, which means that it tends to move before the overall economy in Australia.
It is a valuable tool for businesses and policymakers who want to track the health of the Australian economy.
The index can be used to predict future economic growth and inflation, and it can also be used to make decisions about investment and hiring.
Who publishes the Westpac-MI Leading Index?
The Westpac-MI Leading Index is jointly published by Westpac Banking Corporation, one of Australia’s largest banks, and the Melbourne Institute of Applied Economic and Social Research, a reputable economic research institute affiliated with the University of Melbourne.
When is the Westpac-MI Leading Index released?
The Westpac-MI Leading Index is released monthly, usually on the third Wednesday of the month.
The data can be accessed through the Westpac website and the Melbourne Institute’s website, as well as through major financial news outlets and data providers. Some providers may require a subscription to access the data.
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