A sluggish job market is expected to weigh down economic activity in Australia.
The Westpac-Melbourne Institute Leading Index of Economic Activity is still pointing to above-trend growth from April to October, but the pace is expected to be slower.
The Index - which indicates the likely pace of economic growth three to nine months into the future - dropped by 0.15 points to 98.51 in January, down from 98.66 in December. It had peaked at 98.63 in October.
Six-month annualised growth dropped to 0.46 per cent, from 1.09 per cent. It peaked at 1.23 per cent, in October.
"The index is now around the average above trend read we saw in the April to September period last year when the deviation above the trend growth rate averaged 0.49 per cent," Westpac Institutional Bank said in a statement.
Westpac forecast gross domestic product (GDP) growth will continue to be slow.
It predicts below-trend growth of 2.6 per cent in the June and September quarters from its readings of the index and other indicators.
"This is a reflection of the ongoing weakness in labour market which is weighing down significantly on consumer and investor sentiment," a statement from Westpac said.
Official data show the September quarter last year recorded a 2.3 per cent GDP.
