Australia Leading Index Remains Weak

2026-04-22 01:34 By Farida Husna 1 min. read

The Westpac–Melbourne Institute Leading Economic Index inched down 0.1% month-on-month in March 2026, matching February's reading.

Meanwhile, the six-month annualized growth rate, which indicates the likely pace of economic activity relative to trend three to nine months into the future, declined to –0.13% in March from 0.05% in February.

Higher interest rates and the spike in fuel prices associated with the conflict in the Middle East are starting to weigh on growth momentum, albeit fairly mildly, according to Westpac economist Matthew Hassan.

The March Index already points to a period of below-trend growth over the remainder of 2026.

While the growth pulse is not overly weak, it is the first below-trend read since August last year and, before that, since the extended period of weakness during the ‘cost-of-living’ crisis of 2022–2024.

Westpac expects the Reserve Bank to raise the cash rate by another 25bps in May, with further moves likely in subsequent months.



News Stream
Australia Leading Index Remains Weak
The Westpac–Melbourne Institute Leading Economic Index inched down 0.1% month-on-month in March 2026, matching February's reading. Meanwhile, the six-month annualized growth rate, which indicates the likely pace of economic activity relative to trend three to nine months into the future, declined to –0.13% in March from 0.05% in February. Higher interest rates and the spike in fuel prices associated with the conflict in the Middle East are starting to weigh on growth momentum, albeit fairly mildly, according to Westpac economist Matthew Hassan. The March Index already points to a period of below-trend growth over the remainder of 2026. While the growth pulse is not overly weak, it is the first below-trend read since August last year and, before that, since the extended period of weakness during the ‘cost-of-living’ crisis of 2022–2024. Westpac expects the Reserve Bank to raise the cash rate by another 25bps in May, with further moves likely in subsequent months.
2026-04-22
Australia Leading Index Inches Down
The Westpac–Melbourne Institute Leading Economic Index edged lower 0.1% month-on-month in February 2026, following an upwardly revised flat reading in the previous month. Meanwhile, the six-month annualized growth rate, which indicates the likely pace of economic activity relative to trend three to nine months into the future, held at 0.08%, unchanged from January but down from more firmly positive reads seen late last year. Momentum remains slightly above average in early 2026 but is expected to fade as the central bank’s latest rate hike takes hold and the broader impact of the Middle East conflict emerges. Westpac projects Australia’s GDP growth to slow to 2% in 2026, down from 2.5% last year, underscoring a weakening trend below the nation’s long-term pace. On the monetary front, economist Matthew Hassan noted another 25bp rate hike is likely at the May meeting.
2026-03-18
Australia Leading Index Muted
The Westpac–Melbourne Institute Leading Economic Index edged lower 0.1% month-on-month in January 2026, reversing a 0.1% rise in the previous month. More notably, the six-month annualized growth rate slowed sharply to 0.02% from 0.44% in December, indicating that the slightly above-trend momentum seen in the second half of 2025 has faded in early 2026. Despite the softer signal, Westpac still expects GDP growth to hold at 2.5% this year, close to its estimate of trend growth and broadly consistent with the index’s latest reading, which points to steady rather than accelerating activity. On monetary policy, while a near-term follow-up cash rate hike cannot be ruled out, the board is more likely to adopt a cautious stance, waiting for additional data before tightening further. The central bank’s next meeting is scheduled for March 16–17.
2026-02-18