Economic growth no 'flash in the pan' - ANZ

JAMES WEIR
Last updated 12:01 11/02/2014

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More traffic was on the roads in January, both heavy trucks and light traffic, in a sign that strong economic growth last year was no "flash in the pan", according to a bank survey.

The ANZ Truckometer suggested the economy was settling into a sustained period of growth this year, though quarterly growth rates might have already peaked.

ANZ's Truckometer showed the Heavy Traffic Index was up a solid 1.7 per cent in January, and light traffic was up 1.2 per cent in the month.

Both sets of index figures were on "upward trends" which was seen as a good sign for economic growth in the second half of this year.

Quarterly growth in heavy traffic tends to move in line with economic growth, as trucks move produce around.

Light traffic is seen as a good indicator of growth six months down the track. The willingness to buy and drive a car is the ultimate measure of "money where your mouth is" consumer confidence, ANZ says.

That confidence is then reflected in other spending, hiring and investment decisions, ultimately seen in GDP figures six months later.

Service vehicles, such as courier vans, are also captured in the light traffic flows.

The Heavy Traffic Index rose 1.7 per cent in January after a gain of 1.4 per cent in December, cementing a "steep" trend up in the index.

Heavy traffic flows on nine of the 11 key roads rose in January.

ANZ is picking December quarter economic growth of 0.9 per cent, following the strong September quarter, led by an exceptionally strong bounce back in agricultural production after last summer's drought.

The economy grew a storming 1.4 per cent in the September quarter, boosted by agriculture up 17 per cent as dairy production came back in a rush.

Light traffic improved in January, but the trend had "moderated slightly".

"Some moderation in growth rates would not be surprising in light of the growth surge in the second half of 2013, but the ANZ Truckometer continues to flag solid momentum, across the country," ANZ said.

The recent run of strong results in light traffic has resulted in the most sustained implied quarterly growth profile since the bounce out of recession in 2009-10.

While the Light Traffic Index suggested growth ahead, like the Heavy Traffic Index, it suggested that the September quarter may have been the peak in quarterly growth, ANZ said.

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- Fairfax Media

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