An Australian leading economic index declined in January, stoking speculation the nation is in its first recession since 1991.

The index, a gauge of future economic growth, dropped 0.2 percent to 252.1 points from December, Westpac Banking Corp. and the Melbourne Institute said in Sydney today. The index shrank at an annualized 3.1 percent rate.

Australia’s economy unexpectedly shrank 0.5 percent in the fourth quarter, the first contraction in eight years, as consumers cut spending and exports slowed. Reserve Bank of Australia Governor Glenn Stevens has cut the benchmark interest rate by four percentage points since early September to a 45- year low of 3.25 percent to stoke economic growth.

“The leading index is now in deeply negative territory consistent with contracting economic activity,” said Matthew Hassan, a senior economist at Westpac.

There are only four times in the 49-year history of the index in which its growth rate has fallen below the current level; in the 1960s, the mid-1970s, the early 1980s and the early 1990s, Hassan said. “Each of these was followed by recessions.”

The Australian dollar traded at 66.27 U.S. cents at 10:31 a.m. in Sydney from 66.28 cents just before the report was released. The two-year government bond yield was unchanged at 2.72 percent.

Westpac’s leading index tracks eight gauges of economic activity, such as company profits and productivity, to give an indication of how the economy will perform over the next three to nine months.

Westpac’s coincident index, a measure of the current state of the economy, fell 0.2 points in January to 241.1 points. The annualized growth rate of the coincident index was 1.8 percent, compared to its long-term trend of 3.5 percent.