Australia’s economic growth is expected to rise in the coming months as increased activity in the other parts of the economy make up for the downturn in mining investment.

The Westpac/Melbourne Institute Leading Index, which indicates the likely pace of economic activity three to nine months into the future, rose to 1.2 per cent in October, from 0.6 per cent in September.

The bank’s chief economist Bill Evans said the growth rate in the leading index had been above trend for the last six months.

“Recent above-trend growth in the Index is pointing to a much better outcome over the next few quarters.

“These forecasts take into account an unusually significant drag from the downturn in mining investment,” he said.

“As such, we should interpret the signal from the Leading Index as pointing to a solid lift in the growth momentum of the non-mining sector.”

Mr Evans said Westpac did not expect the Reserve Bank of Australia to cut the cash rate at its December 3 board meeting after reducing it to a new record low of 2.5 per cent in August.

Westpac’s forecast is for a quarter of a percentage point cash rate reduction in February and another in May.

“As indicated in the minutes from the November meeting, the board retains its easing bias but is unlikely to act on that bias in December,” Mr Evans said.

“Strong results in the housing market are providing a fillip to the economy but, at this stage, prospects for the labour market and world economy are uncertain.”

Westpac said it had significantly restructured the components of its Leading index following a review conducted in 2012 and 2013.