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Economic recovery stalls

Staff Reporter 3 minute read

Belinda Luc

Australia's economic recovery has stagnated in the last six months, according to recent research.

The latest Westpac–Melbourne Institute Growth Index found the annualised growth rate was 4.6 per cent in September.

While this figure was above its long term trend of 3.1 per cent, Westpac senior economist Matthew Hassan said the speed of the turnaround is “a little disconcerting”.

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“The growth rate of the Leading Index continues to point to a solid pace of expansion heading into late 2010/early 2011, but that pace has slowed abruptly over the last six months," Mr Hassan said.

“At 10.3 per cent, the peak growth rate in the Index back in March was extremely high."

“Although it currently remains comfortably above its long term average a continuation of trends seen over the last few months could easily see the growth rate drop further in the near term to a below average pace,” he said.

According to Mr Hassan, domestic factors such as dwelling approvals (–1.3ppts), overtime worked (–1.3ppts) and productivity (–1.3ppts) have been instrumental in the growth stall.

Dwelling approvals continued to slide, registering another large 6.6 per cent fall following the 4.8 per cent drop in August.

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