Economic activity slips in August; Hockey announces tax reforms: Midday Roundup

The latest Westpac-Melbourne Institute leading index of economic activity shows growth momentum is flagging, with the growth rate falling to 3.2% in August, down from 4.1% in July.

Despite the fall, the index remains marginally above its long-term trend of 2.9%.

The coincident index, which measures the pulse of current activity, dropped below its long-term trend of 2.9% to 2.4%.

Westpac chief economist Bill Evans said in a statement the economy has “slowed abruptly” over the last six months.

“This trend in the growth rate of the leading index is more in line with Westpac’s forecasts for growth in 2013 and 2014. Some months ago the index was pointing to significantly above trend growth in 2013 but this current slowdown is more consistent with Westpac’s growth forecasts,” he says.

“Westpac expects growth of 2.5% in 2013 and 2.3% in 2014.”

Hockey announces tax reforms

Treasurer Joe Hockey has this morning announced tax reform as a key priority for the first-term Coalition government, as he flagged a pre-Christmas release for the mid-year Economic and Fiscal outlook.

Speaking in a keynote address to the Australian American Association, Business Spectator reported Hockey said the update will reveal the “true updated state of the books and will establish the budgetary base on which we can build a sustainable future”.

“We will consult widely with key stakeholders and deliver a taxation reform program that keeps to our core principles of fairness and simplicity,” he says.

“We will look at adjustments to workplace relations laws to help business grow, create new jobs and deliver high real wage growth while maintaining Australia’s strong and enforceable safety net for workers.”

Shares steady on open

Aussie shares have opened steady, as investors remain cautious as the deadline for the United States to raise the debt ceiling looms.

The S&P/ASX200 benchmark was up 4.9 points to 5264 at 12:08pm ADST. Overnight the Dow Jones closed 0.87% lower, down 133.25 points to 15,168.01.