Growth momentum to remain sluggish in 2016

The economy is headed for more sub-trend growth later this year, but commodity prices are tipped to bottom out, which may provide some relief.

The Australian economy faces more disappointing growth later this year, but stabilising commodity prices may provide some relief.

That's the verdict from the Westpac-Melbourne Institute Leading Index, which rose in May, but had a 13th consecutive negative print.

However, Westpac senior economist Matthew Hassan says May's reading was the best since October.

"Most notably the drag from falling commodity prices, which has been a consistent feature over the last two years, has eased significantly," he said.

Mr Hassan said commodity prices may bottom out in 2016.

"The reduced pressure on incomes is, in turn, expected to see a gradual improvement in conditions over the course of the year," he said.