Economic Buzz: Australian leading index shows loss of momentum for economy

The six-month annualised growth rate in the Westpac?Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, ticked up slightly to ?0.17% in May from ?0.18% in April. The institute noted that Australian economy is showing clearer signs of a loss of momentum. The March quarter national accounts revealed a clear softening in activity with demand near flat outside of a pick-up in data centre related investment. The May Leading Index shows this sluggish, below-trend growth momentum is likely to continue through the second half of 2026 and into early 2027. While the growth pulse is still not overly weak, it?s likely to take some time yet before the full negative impacts from higher interest rates and the spike in fuel costs become apparent. The last six months have seen the Leading Index growth rate swing from a solid positive +0.40% in December to a decidedly sluggish ?0.18%.

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