Australian Leading Economic Index -3.3% Annualized In June

SYDNEY -- A leading index of the Australian economy contracted at an annualized rate of 3.3% in June, compared with a contraction of 5.3% in May.

The index in June was at its strongest level in seven months.

The index of where the economy is headed in the next three to nine months is compiled monthly by Westpac Banking Corp. and Melbourne University's Institute of Applied Economic & Social Research.

A coincident index, which is a broad measure of current economic activity, contracted at an annualized rate of 0.7%, compared with a flat result in May.

"The pace of contraction of the growth rate of the leading index is easing considerably," said Westpac chief economist Bill Evans

"Clearly, the low point in the outlook for growth has been reached and steady improvement can be expected from here," he added.

Westpac expects the economy to grow by 0.2% in 2009, but added that a recent surge in both business and consumer confidence places considerable upside risks on the forecast.

"But the new dimension of a Reserve Bank that appears to be signaling plans to raise interest rates must temper the outlook," he added.