Australia Leading Index Down Slightly

The Westpac-Melbourne Institute Leading Economic Index for Australia slipped 0.1% month-over-month in August 2025, after a 0.1% rise in July. The six-month annualized growth rate also fell to 0.16% from 0.1%, its first below-trend reading since late 2024, signaling a clear softening from the above-trend momentum seen earlier this year. The pattern points to growth easing again after a firm Q2. Westpac forecasts GDP to expand 1.9% in 2025, up from 1.3% in 2024 but still slightly below trend, before returning to trend in 2026. With inflation and consumer demand proving firmer than expected, the RBA is set to keep the cash rate at 3.6% in its September meeting. However, evidence of slowing growth should allow room for a 25bps cut in November, followed by two more cuts in 2026.