The Australian economy is still slowing.

This is reflected in the Westpac-Melbourne Institute leading indicator, which has just been released.

The annualised growth in this indicator, which points the way the economy is likely move in the coming three to nine months, was just 0.6 per cent in October.

That is way below its long term average of 3.5 per cent.

The bank’s chief economist, Bill Evans, said today’s result shows further cooling, after the sharp fall registered on the same index  in September.

“It is likely that growth in 2009 will, at best, show little improvement on the anemic 1.6 per cent growth we expect through 2008,” Evans said.

So what are the chances of a recession, which most economists define as two consecutive quarters of negative growth?

Westpac rejects that definition..

“Our preferred definition of a recession is if the economy actually contracts over the year,” Evans said.

On that criterion, Australia has experienced three recessions since 1965.  They came in the mid 1970s, the early 1980s and in the early 1990s.

Mr Evans said his bank’s leading indicator had turned negative before all three recessions.

That hasn’t happened yet, this time.