In late 2004, K.C. Sung is planning an asset allocation strategy but would first like to assess Australia’s current economic environment, then make a forecast for the economic conditions expected over the succeeding six- to nine-month period. Sung has learned that the leading indicator measures that he has compiled are indicative of current economic activity. However, Sung has seen over time that these specific measures impact many parts of the economy and thus are also predictive of potential longer-term (six- to nine month) economic impacts as the initial economic activities create jobs and other beneficial output throughout the Australian economy.
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Jan 2013
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Feb 2013`
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March 2013 (most recent)
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Consumer orders growth
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-0.01
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0.02
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0.07
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business capital goods orders growth
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0.04
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0.05
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0.04
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centtal bank money supply growth
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0.12
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0.15
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0.16
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total index value
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111
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115
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116
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Using the leading indicator approach to forecasting, draw a conclusion for the Australian economy for the next six to nine months using only the above table. (Hint: “consumer orders” measures the consumer-oriented aspect of the Australian economy, “business capital goods orders” measures the business-oriented aspect of the Australian economy, “central bank money supply” measures the central bank-oriented aspect of the Australian economy)