The six-month annualised growth rate in the Westpac–Melbourne Institute Leading Index slowed to +0.02% in January from +0.44% in December, signaling growth momentum stalling into 2026.

• Momentum moved from slightly above trend back in line with trend, indicating the late‑2025 pickup has faded at the start of 2026.
• Compared with six months ago, the growth rate moderated 0.17ppts from +0.19% in July to near‑flat +0.02%, pointing to a broader loss of momentum.
• Consumer expectations shaved 0.16ppts and dwelling approvals cut 0.23ppts, showing the slowdown is concentrated in consumer and housing channels.
• Commodity prices added 0.36ppts over six months, but AUD strength trimmed the boost, suggesting external support may be waning.
• Westpac expects GDP growth to hold around 2.5% in 2026, implying a near‑trend pace despite the softer leading signal.

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, nudged up to +0.42% in December from +0.20% in November.

The latest update is broadly consistent with 2025’s recovery carrying into 2026. However, the momentum is still not all that convincing with the Index growth rate only modestly above trend, having stalled through the middle of last year. An outright strong growth pulse, associated with Leading Index growth rate reads of over 1%, still looks to be a long way off. Westpac expects the Australian economy to grow by 2.4% this year, a result that we would see as being roughly around trend. 

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, slipped back to +0.16% in November from +0.32% in October.

The Leading Index has pared back from a brief stint in slightly above-trend territory, largely reflecting the recent sell-off in share markets and a cooling in consumer expectations. While the Index remains in positive territory, it is fairly subdued and indicative of some stalling in momentum. Westpac expects that activity will only pick up slightly from here, from 2.1%yr currently to 2.4%yr over 2026, which Westpac views as being roughly around trend. 

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, moved into slightly positive territory in October, lifting to +0.35% in October from +0.10% in September. 

After oscillating around a zero reading for the past six months, the Leading Index has built up some momentum heading into year-end, with the October update pointing to growth running at a slightly above-trend pace in early 2026. While the growth signal is not particularly strong, it is consistent with Westpac’s view that activity will continue to pick up steam over the rest of this year and into next, with GDP growth forecast to rise from 1.8%yr currently to 2.4%yr over 2026. Westpac views this as roughly around-trend, with the current slightly-above-trend momentum evident in the Leading Index expected to encounter some headwinds as we enter the new year.

Australia’s Westpac–Melbourne Institute Leading Index rose to +0.04% in September 2025 (from -0.16% in August), nudging back above trend and suggesting near-trend growth momentum heading into early 2026.

• The Index has slowed from a peak of +0.83% in February to around zero since June, reflecting fading momentum but continued stability around trend levels.

• Over the past six months, the Index growth rate moderated by -0.44 ppts, mainly due to weaker dwelling approvals (-0.24 ppts) and lower commodity prices (-0.21 ppts).

• Reduced support from the yield spread and consumer sentiment components subtracted -0.39 ppts since March, showing persistent caution among households.

• Offsetting factors included a 12.8% rally in the S&P/ASX200, which added +0.32 ppts to overall Index growth.

• Westpac projects GDP growth of about 2% in 2025, rising to a trend pace in 2026, supported by gradual recovery in housing and commodity sectors.

• The RBA next meets on November 3–4, with Westpac expecting the next move to be a rate cut, contingent on CPI and labor market data.