After rising strongly in both July and August, The Data App’s (TDA) Monthly Activity Indicator (MAI) for Australia fell marginally in September, as restrictions placed on movement and activity in Victoria took hold. So, following on from the 0.8% increase posted in August, the MAI declined 0.1% in September, thereby breaking a run of two consecutive monthly increases. The annual rate of growth moderated to be below its ten-year average.
Underpinning the decline in the MAI during the month was a softening in the labour market and a decline in retail turnover. This weakness was sufficient to outweigh a strong rise in building approvals, an upturn in exports and a less negative perception on business conditions by companies.
No doubt future activity will be boosted by the easing of the lockdown restrictions imposed in Victoria, with early signs of retail turnover improving. Furthermore, the lifting of some interstate movements, will help oil the wheels of activity. Pulling in the other direction, Government transfer payments are being pared back and, in all likelihood, the higher level of unemployment will also crimp activity.
About the MAI
With no official monthly measure of Australian activity available it is difficult to get a timely measure of how the economy is performing. In an attempt to fill this gap, The Data App (TDA) developed a Monthly Activity Indicator (MAI). The MAI is estimated using an econometric model based on a number of different, high frequency, monthly economic activity indicators as key factor input variables.
Given the current economic climate, the MAI should assist in quantifying the magnitude of the current economic downturn, as well as identifying a point of inflection.
Key attributes of the MAI include:
- Tracks activity in the private sector economy.
- An indicator for tracking business cycles – downturns and upswings in the economy.
- A timely measure of economic activity.
The Data App (TDA) is part of the PAR.Group, an independent research collective. More information about the group can be found on the website http://par.group/