The Westpac–Melbourne Institute Leading Economic Index was unchanged in July, following an upwardly revised 0.1% increase in June. The six‑month annualised growth rate edged up to -0.2% from -0.4%, but remained below trend for the seventh consecutive month.
Overall momentum has firmed slightly since mid‑year, indicating an economy that is soft rather than weak, with GDP growth expected to remain positive even as output per capita is close to flat. Westpac anticipates the Reserve Bank will keep interest rates on hold again in September, while continuing to signal its readiness to tighten policy further if inflation proves persistent.
Westpac Head of Macro‑Forecasting, Matthew Hassan, noted that the softer growth indicators should give the Board some confidence that demand is gradually coming into better balance with supply, even as the moderation highlights the economy’s underlying resilience. The central question remains whether the slowdown will be sufficient to return inflation to the 2–3% target band within the required timeframe.
