Australia's economy is likely to grow more sluggishly in 2016, new figures show.
The Westpac/Melbourne Institute Leading Index fell 0.15 points to 97.07 in February, from 97.22 in January.
It's the fourth decline in five months of the index, which indicates the likely pace of economic activity three to nine months into the future.
Westpac economist Matthew Hassan says the fall is a clear sign the economy will grow more sluggishly this year than the strong 3.0 per cent gross domestic product growth as a whole in 2015, with growth running at a 3.5 per cent annual pace over the year's second half.
"That solid finish was foreshadowed by the Leading Index which had run 0.10 per cent above trend on average over the first half of 2015," he said.
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"The index has since weakened significantly, with the six-monthly annualised growth rate averaging 0.67 per cent below trend since mid-2015.
"That is a clear signal that growth is set to return to the more sluggish 2.0-2.5 per cent GDP growth rates seen in 2014."
Mr Hassan said the same international factors that weighed on the index in January - falling commodity prices and weak US industrial production - had also pushed the index lower in February.
Domestically, the falling ASX, a 7.5 per cent decline in dwelling approvals in January and a slightly poorer outlook for the labour market also helped push the index lower.
Mr Hassan said that despite the weakened economic outlook, he expected interest rates to remain on hold in 2016.
"Although the (Reserve) Bank is clearly watching developments abroad closely for potential threats, the solid growth figures for 2015 and continued resilience of the labour market are major positives domestically," he said.
"Recent strength in the Australian dollar has been associated with a more positive outlook for commodity prices and as such would not be grounds for a policy adjustment."
