The Westpac Leading Index (WLI) for Australia rose by 0.10% month-over-month (MoM) in November 2025, according to the latest data from the Sigmanomics database. This increase follows a flat reading of 0.00% in October and falls short of the 0.20% consensus estimate. The index’s modest uptick suggests a cautiously improving economic environment but highlights persistent headwinds.

Drivers this month

• Housing approvals contributed 0.04 percentage points (pp), reflecting steady construction activity.
• Consumer sentiment added 0.03 pp, buoyed by easing inflation expectations.
• Business investment indicators were flat, contributing 0.00 pp.
• Export orders declined slightly, subtracting -0.02 pp amid global demand concerns.

Policy pulse

The reading remains below the 12-month average of 0.15%, indicating growth is slower than the longer-term trend. The Reserve Bank of Australia (RBA) has maintained a cautious stance, with the cash rate steady at 4.10%, reflecting balanced inflation risks and growth moderation. The WLI’s subdued rise aligns with the RBA’s inflation target range of 2–3%, suggesting no immediate pressure for policy shifts.

Market lens

Immediate reaction: The AUD/USD pair dipped 0.15% in the first hour post-release, reflecting disappointment versus expectations. Australian 2-year government bond yields edged down by 3 basis points, signaling slightly reduced rate hike bets. Equity markets showed muted response, with the ASX 200 closing flat.

The Westpac Leading Index integrates multiple forward-looking indicators, including housing permits, consumer confidence, business investment intentions, and export orders. These components collectively anticipate economic activity 3 to 6 months ahead.

Core macroeconomic indicators

• Housing approvals rose 1.20% MoM in October, supporting the 0.04 pp contribution to the WLI.
• Consumer sentiment improved 2.50% MoM, reversing a two-month decline amid easing inflation pressures.
• Business investment intentions remained flat, reflecting uncertainty in capital expenditure plans.
• Export orders fell 0.80% MoM, pressured by slower demand from China and Europe.

Monetary policy & financial conditions

The RBA’s current policy rate of 4.10% has been unchanged since September 2025. Financial conditions have tightened modestly, with credit spreads widening by 10 basis points over the past month. The Australian dollar’s real effective exchange rate appreciated 1.30% over the last quarter, weighing on export competitiveness.

Fiscal policy & government budget

Fiscal stimulus remains limited, with the 2025–26 budget projecting a modest deficit of 0.50% of GDP. Infrastructure spending is steady but not accelerating, while tax policy remains neutral. Government support for housing remains a key factor sustaining construction activity.

The chart below illustrates the WLI’s monthly changes over the past 24 months, highlighting the recent plateau and slight uptick. The index’s volatility has diminished, reflecting more stable but subdued growth expectations.

Market lens

Immediate reaction: The AUD/USD currency pair weakened by 0.15% post-release, reflecting investor caution. Australian 2-year bond yields declined 3 basis points, indicating reduced expectations for near-term rate hikes. Equity markets were largely unchanged, signaling a wait-and-see stance.

Looking ahead, the Westpac Leading Index’s modest rise suggests a cautiously positive economic outlook for Australia, but risks remain. The balance of factors points to a range of scenarios over the next 6 to 12 months.

Bullish scenario (30% probability)

• Stronger-than-expected global demand, especially from China and the US, boosts exports.
• Housing market stabilizes further, driving construction and consumer spending.
• Inflation moderates, allowing the RBA to pause or ease monetary policy.
• Result: WLI accelerates to 0.25% MoM, supporting GDP growth above 3% annually.

Base scenario (50% probability)

• Moderate global growth with ongoing geopolitical tensions limits export gains.
• Housing market remains steady but without strong expansion.
• Monetary policy remains on hold, with inflation near target.
• Result: WLI grows around 0.10–0.15% MoM, consistent with 2–2.50% GDP growth.

Bearish scenario (20% probability)

• External shocks, such as a China slowdown or commodity price shocks, reduce exports.
• Rising interest rates tighten financial conditions further.
• Consumer and business confidence weaken, slowing investment.
• Result: WLI stalls or contracts, risking recessionary pressures.

The November 2025 Westpac Leading Index MoM reading of 0.10% signals a tentative but fragile recovery for Australia’s economy. While the index’s rise is encouraging after a flat October, it remains below historical averages, reflecting ongoing challenges from global uncertainty, tighter financial conditions, and cautious domestic demand.

Monetary policy appears well-calibrated for now, with the RBA maintaining rates amid balanced inflation and growth risks. Fiscal policy remains neutral, providing limited additional stimulus. External risks, including geopolitical tensions and commodity price volatility, pose downside threats.

Investors and policymakers should monitor housing trends, export demand, and consumer sentiment closely, as these will be key drivers of the WLI and broader economic momentum in coming months.

For trading and investment strategies, the following symbols are relevant due to their correlation with Australian economic conditions and the Westpac Leading Index:

• ASX200 – Reflects overall Australian equity market sentiment and economic outlook.
• AUDUSD – Sensitive to domestic economic data and monetary policy expectations.
• AUDJPY – Tracks risk sentiment and carry trade flows linked to Australian growth.
• BTCUSD – Proxy for global risk appetite, which indirectly affects Australian exports and investment.
• BHP – Major Australian mining stock, sensitive to commodity demand and export trends.

Key Markets Likely to React to Westpac Leading Index MoM

The Westpac Leading Index influences a range of markets tied to Australia’s economic outlook. Equity investors watch the ASX200 for shifts in growth expectations. Currency traders focus on AUDUSD and AUDJPY for monetary policy signals. Commodity-linked stocks like BHP respond to export demand changes. Additionally, BTCUSD reflects global risk appetite, indirectly impacting Australian markets.

Insight: Westpac Leading Index vs. ASX200 Since 2020

Since 2020, the Westpac Leading Index and the ASX200 have shown a positive correlation of approximately 0.65. Periods of WLI acceleration typically precede equity market rallies by 1–3 months. For example, the WLI’s strong gains in early 2023 aligned with a 12% ASX200 rise over the following quarter. Conversely, WLI stagnation in late 2024 coincided with market volatility and flat returns. This relationship underscores the WLI’s value as a forward-looking economic gauge for Australian equities.

FAQs

What is the Westpac Leading Index MoM?

The Westpac Leading Index MoM measures monthly changes in leading economic indicators to forecast Australia’s economic activity 3–6 months ahead.

How does the Westpac Leading Index impact monetary policy?

The index signals economic momentum, influencing the Reserve Bank of Australia’s decisions on interest rates to meet inflation targets.

Why is the Westpac Leading Index important for investors?

It provides early insight into economic trends, helping investors anticipate market movements in equities, currency, and commodities.

Takeaway: The November 2025 Westpac Leading Index MoM reading of 0.10% signals a cautious recovery for Australia, balancing modest growth prospects against persistent global and domestic risks.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.