Australia’s Westpac–Melbourne Institute Leading Index fell to –0.16% in August (from +0.11% in July), marking the first below-trend reading since September 2024 and pointing to slowing economic momentum.

• The Leading Index has declined from a peak of +0.86% in February to –0.16% in August, a swing of just over –1 ppt.

• Four main components drove the slowdown: consumer unemployment expectations (–0.34 ppts), commodity prices in AUD (–0.25 ppts), consumer expectations (–0.22 ppts), and dwelling approvals (–0.19 ppts).

• Additional drags came from the yield spread, US industrial production, and total hours worked, which together subtracted –0.18 ppts.

• The only positive contributor since February was the equity market, with a 10% rally in the ASX200 adding +0.16 ppts.

• June quarter GDP rose 0.6% QoQ and 1.8% YoY, supported by firm consumer spending, though boosted by temporary one-off factors such as public holidays and end-of-year sales.

• Westpac projects GDP growth of 1.9% in 2025 (vs 1.3% in 2024), still slightly below trend, with growth expected to normalize by 2026.

• The RBA is expected to hold the cash rate at 3.6% in September, with Westpac anticipating a 25 bp cut in November and two more in 2026 as growth slows and inflation remains contained.