TDA’s monthly activity indicator (MAI) estimates activity collapsed by a record rate in April. Following the largest ever increase posted by the MAI in March, a decline of an even greater magnitude was recorded in April. Needless to say, the fall in April eclipsed anything registered previously and suggests that, after holding up well in the first quarter of the year, the economy nose-dived shortly thereafter.
The MAI fell 2.1% in April 2020 after rising by a record rate of 1.5% in March. The weakness in April was widespread, as consumers stopped spending, employment collapsed, the construction industry stalled, businesses pessimism was maintained and exports moderated following a strong rise in March.
Compared to a year earlier, the MAI is 0.4% higher. This is sharp reversal from last month, when annual growth was 2.8%, Consequently, the level of activity is back to where it was in May 2019, which means close to a year’s growth has been eradicated.
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) has developed a Monthly Activity Indicator (MAI). The MAI is estimated using an econometric model based on a selection of monthly economic activity measures as key factor input variables.
Given the current economic climate, the MAI should assist in quantifying the magnitude of the current economic downturn.
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/