11 Dec 2013

More modest growth tipped for next year

7:05 am on 11 December 2013

A measure of the economy based on traffic flows suggests this year's strong second half will not be matched in the first half of next year.

The ANZ Truckometer measures the economy by traffic flows on certain roads.

A more immediate barometer, the heavy traffic index, fell 1.5%, suggesting the economy is taking a breather but still maintaining strong growth based on past increases.

A forward-looking light traffic index fell 1.1%, pointing towards slower growth in the first half of 2014.

ANZ senior economist Sharon Zollner said the truckometer's six-month averages showed the economy was in top gear.

"Both the heavy traffic index and the light traffic index fell a little bit in November but that's within the context of upward trends in both of those areas, so this suggests that momentum is continuing in the economy," Ms Zollner said.

There had been real income growth across the economy, including estimates of a boost in dairy incomes of at least $4.5 billion - more than 2% of the size of the whole nominal economy - which was a big boost to the economy, she said.

"You add on a rebounding housing market as well and migration that's turning around - there are some pretty good reasons why the economy is growing faster at the moment."

Ms Zollner cautioned against reading too much into the fall in the light traffic index. However, she said it did suggest the economy might take a little bit of a breather from the sort of growth rates expected for the second half of this year.

She said she would not be surprised to see a period of more modest growth but did not expect anything alarming.