Sydney---Australia's economy remained soft in the fourth quarter of 2014 as growth continued to be driven by exports, data showed Wednesday, fuelling expectations of further interest rate cuts.
The economy grew by 0.5 percent in the three months to December to take the 2014 rate of expansion to 2.5 percent, the Australian Bureau of Statistics said.
This was below analysts' expectations of 0.7 percent quarterly growth for an annual gross domestic product reading of 2.6 percent.
But it was an improvement on an even weaker reading in the three months to September of 0.3 percent.
The Australian dollar rose from 78.15 US cents to 78.31 US cents after the figures were released.
"Overall growth was still subdued at the end of last year, but some of the detail was encouraging," Barclays' chief economist for Australia Kieran Davies said.
"We had the strongest increase in consumer spending in a few years and non-mining business investment looks to be doing a bit better."
Net exports continued to support growth, expanding 0.7 percentage points for the quarter while consumption spending lifted by 0.6 percentage points. Business inventories weakened, falling 0.6 percentage points.
Australia is experiencing a bumpy exit from an unprecedented boom in mining investment, with non-resources industries yet to fill the gap.
The Reserve Bank of Australia cut interest rates to a new record low of 2.25 percent at its February meeting in a bid to support growth in the non-mining sectors.
It kept rates on hold at its March meeting on Tuesday but adopted an easing bias, cautioning that "growth is continuing at a below-trend pace, with domestic demand growth overall quite weak".
The jobless rate has steadily risen over the past year, jumping to a 12-year high of 6.4 percent in January, while consumer and public spending has mostly remained soft.
AFP
