Analysts expect softer GDP in December quarter

Official economic growth figures to be released this morning are expected to highlight the significant impact of the mining sector slowdown.

The Bureau of Statistics will release the December quarter gross domestic product figures less than 24 hours after the Reserve Bank decided the signs of economic weakness were not enough to merit another cut to the official interest rate.

A survey of 28 economists by Bloomberg has found they expect below-trend growth.

Their median estimate is for GDP to slow to an annual rate of 2.5 per cent, down from 2.7 per cent in the prior quarter.

Some are expecting the result to be significantly worse though, led by three analysts predicting GDP growth will fall to 2.2 per cent.

HSBC chief economist Paul Bloxham expects today's figures to show the rebalancing act from mining-led growth to other parts of the economy is proceeding at a sluggish pace.

"Although we're seeing a pick-up in residential construction and we think we're seeing a pick-up in consumption, what we haven't seen yet is a pick-up in investment by non-mining business. We expect that to be clear in the Q4 data," Mr Bloxham said.

"We're expecting to see that business investment is weak because we see mining investment falling and non-mining investment not picking up enough to offset that decline."

Building approvals figures for January released yesterday showed there were a record number of homes set for construction in the month, but other data last week suggests business investment is soft and likely to get softer.

Mr Bloxham's GDP prediction is at the upper end of analyst predictions, at 2.6 per cent, but he says even that number would justify another rate cut from the RBA.

"The RBA has fairly strongly hinted that they'll need to cut interest rates a bit further," he said.

"They think GDP growth is tracking below trend and the unemployment rate's continuing to climb and we'd expect to see that in coming months."