Here are 2 charts that reveal the recent deterioration in Australian economic data

Photo by Robert Gray/Getty Images

These two charts reveal the recent deterioration in Australian economic position, courtesy of Paul Brennan, Josh Williamson and Vivian Jiang, Citibank Australia and New Zealand’s economic team.

They look at the current state of Citi’s Australian economic barometer – a measure of leading and lagging financial indicators – compared to three months ago.

Here’s the current state of their economic barometer.

And here’s the same barometer, only from three months earlier.

As you can see, economic indicators are now predominantly slowing or contracting compared to improving or steady compared to three months earlier.

“The economic barometer has shown some signs of deterioration from three months ago. Most noticeably the interest rate sensitive housing sector is starting to slow, while consumer sentiment and retail sales are both weaker than three months ago”, the trio note.

“Prices growth remains subdued with both the inflation gauge and commodity prices in the contraction quadrant of the barometer. However, on the upside we have seen the labour market to be more resilient than expected, while business confidence is also starting to pick up”.

Given the deterioration in the barometer, Brennan, Williamson and Jiang recently lowered their Australian GDP growth forecasts for 2015 and 2016, predicting the economy will grow 2.25% in 2015 before accelerating slightly to 2.5% in 2016.

“The downgrades reflect the weak H1 this year and more challenging global backdrop, given the impact on Australian incomes. We still see growth picking up, but from a lower base and not as strongly as previously”.

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