Australia's growth momentum gained 0.5 percent from a month earlier to 284.2 and may after all see the light in the last quarter leading to 2012 as economic indicators were revised upwards to reflect this outlook.

The leading Australian index of leading economic indicators picked up in July, according to a joint study made by the Melbourne Institute and Westpac Banking Corp. (WBC).

According to the joint statement released in Sydney, the Australian index of leading economic indicators will offset the decline in consumer confidence.

The index, which is a gauge of future economic growth, gained 0.5 percent from a month earlier to 284.2, and the Melbourne Institute said in a statement in Sydney on Wednesday.

"The sharp turnaround in growth momentum in the second quarter explains all of this improvement," said Bill Evans, Westpac's chief economist who in July predicted the RBA will lower its benchmark interest rate in December.

"Inflation risks have eased, labor markets are softening, credit growth and housing markets are weak, and confidence, amongst both consumers and businesses, has tumbled," Mr Evans added. "We believe that the case is there now for a rate cut."

Westpac's leading index tracks eight gauges of activity, including company profits and productivity, to give an indication of how the economy will perform over the next three to nine months. The coincident index, a measure of the current state of the economy, was littled changed at 265.6 in July, the bank said.

In spite the reduction of growth expectations from the International Monetary Fund, Australia's Reserve Bank sees the country's medium-term economic prospects as "positive," according to minutes released yesterday of the central bank's Sept. 6 policy meeting.

Reserve Bank Governor Glenn Stevens has kept the overnight cash rate target at 4.75 percent all year as monthly employment from January through August came in less than a 10th of the average of 30,500 job gains in the first eight months of 2010. With reports from Reuters and Bloomberg