Westpac Leading Index

Data Macro

Source: Westpac
Source Link: https://www.westpaciq.com.au/
Frequency: Monthly
Next Release(s): September 17th, 2025 7:00 PM

Latest Updates

The Westpac–Melbourne Institute Leading Index six-month annualised growth rate edged up to 0.12% in July (prev 0.01%), but momentum remains subdued and well below the 0.61% start to the year.
- Commodity prices were the largest drag, subtracting –0.25 ppts from the Index since January due to falling USD commodity prices and a stronger AUD.
- Labor market indicators also weighed, with declining total hours worked and softer consumer expectations cutting –0.22 ppts from growth.
- Dwelling approvals and unemployment expectations improved in July but remained weak for much of 2025.
- Financial markets contributed modest support, with the ASX200 recovery and a slightly steeper yield curve adding +0.13 ppts since January.
- Westpac projects GDP growth of 1.7% in 2025 (vs 1.3% in 2024), returning to a 2.2% trend pace only by end-2026.
- The RBA is expected to hold rates at its September meeting, with a further 25 bp cut anticipated in November as easing continues gradually.
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The Westpac–Melbourne Institute Leading Index six-month annualised growth rate slowed to 0.03% in June from 0.11% in May, signaling that Australian economic activity is trending flat and losing momentum.
- The index has declined steadily from 0.33% in December 2024, dragged down by weaker commodity prices (-0.24 ppts) and softer labor market indicators (-0.28 ppts).
- Dwelling approvals and consumer unemployment expectations remained weak, while financial markets and US industrial production provided modest support.
- Westpac expects GDP growth of just 1.7% YoY in 2025, slightly better than 2024’s 1.3% but well below the long-term average.
- The RBA held rates steady in July, but Westpac forecasts a 25 bp cut in August if the upcoming Q2 CPI print is benign.
- Further rate cuts are anticipated in November and into early 2026 as part of a gradual easing cycle.
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The Westpac–Melbourne Institute Leading Index six-month annualised growth rate fell to -0.08% in May from 0.19% in April, marking its first below-trend reading since September 2024.
- Domestic drags now outweigh external ones, led by declining dwelling approvals (-0.21 ppts) and slower growth in hours worked (-0.13 ppts).
- Consumer sentiment and unemployment expectations also subtracted a combined -0.24 ppts from the index.
- Financial markets contributed negatively, with the S&P/ASX200 subtracting -0.16 ppts, though some improvement is expected near term.
- US industrial production was the main positive, adding 0.29 ppts, though future gains are likely capped by global trade frictions.
- Westpac forecasts GDP growth of 1.7% YoY by end-2025 and expects the RBA to hold rates in July before a possible cut in August.
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The Westpac–Melbourne Institute Leading Index six-month annualised growth rate slowed to 0.2% in April from 0.5% in March, signaling a loss of above-trend momentum as external and sentiment-driven pressures weigh on the outlook.
- The Index is now flat compared to six months ago, with five of eight components weakening.
- Biggest drags came from consumer expectations (-0.23 ppts), equities (-0.12 ppts), and unemployment expectations (-0.10 ppts).
- Dwelling approvals and total hours worked also combined to subtract 0.10 ppts from the growth rate.
- Offsetting positives over the period included commodity prices (+0.24 ppts), US industrial production (+0.17 ppts), and the yield spread (+0.15 ppts), though all have lost steam recently.
- Westpac expects GDP growth to reach 1.9% YoY by end-2025; the RBA is expected to keep policy on hold at its July 7–8 meeting pending the next inflation update.
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The Westpac-Melbourne Institute Leading Index six-month annualized rate slowed to 0.6% in March, down from 0.9% in February.
- The Leading Index growth rate has lifted from –0.24% in September last year to +0.63% currently.
- Four of the eight components have driven the 0.87 ppt improvement: commodity prices adding 0.42 ppts, a widening yield spread adding a further 0.34 ppts, improving US industrial production adding a further 0.15 ppts and improving consumer expectations for jobs adding another 0.12 ppts.
- Westpac expects growth to track a slower recovery, lifting to 1.9% in 2025 revised down from a previously forecast 2.2%.
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The six-month annualised growth rate in the Westpac–Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, lifted to 0.8% in February from 0.6% in January.
- The above-trend growth pulse has continued to firm a little but remains consistent with a gradual recovery rather than a sudden surge.
- Westpac expects GDP growth to track a slow rise over the course of 2025, reaching 2.2%yr by year-end. While that would be a material improvement on the 1.3% yr gain seen in 2024, it implies a relatively subdued performance by historical standards.
- Australia’s growth typically tracks in the 2.5–3% range, about 1ppt above population growth.
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The six-month annualised growth rate in the Westpac–Melbourne Institute Leading Index lifted to 0.58% in January from 0.24% in December, a 2.5 year high.
- The last time the index was at this level, the RBA was increasing interest rates in response to elevated inflation.
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The Australian Westpac-Melbourne Institute Leading Index six-month annualized rate eased to 0.25% in December from 0.33% in November indicating growth slightly above trend in the next 3 to 9 months. Westpac sees GDP growth to be about 2.2% in 2025, an improvement on the 0.8% growth in 2024. The positive readings are ahead of the negative readings that were seen in the middle of last year.

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The Australian Westpac Leading Index six-month annualized growth rate was 0.32% in November, slightly above the 0.22% rate in October. These two readings are the first back-to-back positive readings in 2.5 years.

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