Australia economic momentum shows early signs of strengthening in Oct

Ryan Wells, economist at Westpac, said the Index had “built up some momentum heading into year-end”, aligning with Westpac’s projection for GDP growth to lift from 1.8 per cent to around 2.4 per cent over 2026. He cautioned, though, that this momentum may encounter headwinds in the new year.

The latest uplift reflects easing uncertainty since the sharp market reaction to US President Trump’s ‘reciprocal’ tariff announcement earlier in the year. The Index growth rate has since improved by 0.19 percentage points, Melbourne Institute of Applied Economic and Social Research said in a press release.

Three components drove the rebound. The standout factor was a surge in consumer expectations, delivering the first net positive sentiment reading in nearly four years and adding 0.19 percentage points to the Index. Australian equities also provided support, with the S&P/ASX200 trading well above April’s lows and contributing 0.17 percentage points. Growth in hours worked added a further 0.07 percentage points.

“The contributions from these components could be at risk of shrinking over the months ahead as we move past the ‘Liberation Day’ period as the base of comparison. Consumer expectations have been volatile month-to-month lately and this could continue. It is also worth noting that the S&P/ASX200 has sold off significantly so far this month. If share prices are sustained at these levels in the rest of November, its positive contribution this month could unwind,” added Wells.

ALCHEMPro News Desk (SG)