The Westpac Leading Index fell for the sixth consecutive month in February to bring the annual pace of decline to -5.1%, the worst since 1982. Westpac chief economist Bill Evans said the rate of contraction is "truly remarkable", adding that the index signals "the Australian economy will enter a recession." If the RBA pauses their rate cuts it could be tactical to boost confidence. "We expect the bank will see the need to have ample capacity to be cutting rates through the second half of 2009…The economic case for cutting rates is undeniable," Evans said.

Scary stuff. At least our banks are looking pretty solid. Data released by the RBA yesterday show bank balance sheets are in a very healthy state. While impaired assets or bad loans rose by $6.7 billion in the December quarter, total assets rose at a far faster rate - up $130.6 billion in the quarter or almost 5.2 per cent. The impaired assets (bad loans) ratio rose from 0.52 per cent to 0.74 per cent in the December quarter - a decade high but still well below levels reached following the last recession.

On a positive note, if you can call it that, - in Beijing this month the ratio of blue-sky days has gone back to the levels of late last year, as factories reopen and the once-ubiquitous Beijing smog returns.The Beijing authorities classify a blue-sky day as one where its Air Pollution Index is below 50. There are also a range of other indicators including car and real estate sales, air travel, industrial production which suggest momentum is returning to the underlying Chinese economy. This will obviously be good for our mining sector.