---
source: Westpac Banking Corporation
url: https://www.westpaciq.com.au/economics/2026/03/leading-index-march-2026
document_type: html
date_retrieved: 2026-03-18
period: February 2026
parent_publication: Westpac-Melbourne Institute Leading Index
indicators_covered: [Leading Index, Leading Economic Index]
---

# Leading Index holds slightly above trend for now

**Published:** March 18, 2026 (10:30 AEDT)

**By:** Matthew Hassan, Head of Australian Macro-Forecasting, Westpac

## Key Findings

- **Leading Index growth rate unchanged at +0.08% in February.**
- Softer financial components offset by higher commodity prices, hours worked.
- Rate hikes, Middle East conflict starting to impact but likely more to come.

## Overview

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, held at **+0.08% in February, unchanged from January** but down from more firmly positive reads seen late last year.

Momentum remains a touch above average in early 2026 but is likely to drop in coming months as the RBA's latest interest rate hike impacts and we start to see the fuller effects from conflict in Middle East. Westpac expects the combination to see Australia's GDP growth slow to **2% this year**, a material weakening on last year's 2.5% pace and one that we see as below trend for Australia. While there are some hints of this in the February Leading Index read, these signals should become much clearer as we move into March and April.

## Momentum Moderation

The Leading Index growth rate has moderated slightly from **+0.13% in September to +0.08% in February**. The main drivers have been developments in financial markets. A cooling sharemarket has seen the contribution from the S&P/ASX200 component shift from +0.19ppts to flat with current readings suggesting this will become an outright drag on the Index growth rate next month.

## Index Components

The Westpac-Melbourne Institute Leading Index combines a selection of economic variables that typically lead fluctuations in economic activity into a single measure that provides a reliable cyclical indicator for the Australian economy. 

The index includes the following components:

- S&P/ASX 200
- Dwelling approvals
- US industrial production
- RBA Commodity Prices Index (A$)
- Aggregate monthly hours worked
- Westpac-MI CSI expectations index
- Westpac-MI Unemployment expectations index
- Yield spread (10Y bond – 90D bill)

The index has a base value of 100 as of 1996.

## Full Report

A comprehensive full report is available at the Melbourne Institute: ['Westpac-MI Leading Index February' (PDF)](https://library.westpaciq.com.au/content/dam/public/westpaciq/secure/economics/documents/aus/2026/03/er20260318BullLeadingIndex.pdf)

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## About the Index

The Westpac–Melbourne Institute Leading Index is a joint initiative between Westpac and the Melbourne Institute at the University of Melbourne. The index synthesizes leading economic indicators to forecast economic activity 3-9 months ahead, helping analysts anticipate economic turning points and momentum shifts in the Australian economy.