Australian leading indicators were unchanged for August following a revised 0.5% gain the previous month, which was originally reported as a 0.4% increase.
The coincident indicator was also unchanged for the month and has shown some flattening of the trend over the past few months, which could indicate an underlying slowdown. This was the first unchanged reading for four months and before then there were three successive declines ending for the March data released in May.
The latest unchanged reading could suggest an underlying slowdown in momentum, although it is more likely to be a correction from the firm 0.5% increase for July. The moving average still shows a solid increase over the past few months.
The Reserve Bank remains generally optimistic surrounding the growth outlook, but is still uneasy over the risks of inflation remaining below target. The Australian economy has not experienced a recession for over 25 years and the overall data from leading indicators do not show any significant threat of a downturn, especially as commodity prices have been recovering and global deflation fears have increased slightly. There will still be important underlying concerns surrounding Chinese credit growth and risks of a hard landing, which would pose a serious threat to the Australian economy.