Australia’s Westpac Leading Index slipped from 0.11% to just 0.03% in May, continuing a six-month slide that points to weakening momentum heading into the second half of 2025. The index, which provides a guide to economic activity three to nine months ahead, has lost altitude from 0.33% in December, with five of eight components dragging—particularly commodity prices, consumer sentiment, and hours worked.
Westpac noted that the shift from modestly above-trend growth to an “around trend” signal marks a clear step-down in economic momentum. The bank now expects the economy to expand by only 1.7% in 2025, a slight pickup from 1.3% in 2024, but still well below historical averages.
With the RBA set to meet on August 11–12, the Leading Index adds to the case for renewed policy easing. Westpac sees the June quarter CPI, due next week, as the key swing factor. A benign reading would likely clear the way for a 25bp cut in August, followed by another in November and two further cuts in H1 2026 as the central bank gradually loosens policy amid persistent growth headwinds.
