Australia’s rate of economic growth in the coming months is expected to stay above it’s long term average, a private survey shows.

A rally on the share market, modest improvement in productivity and a smaller drag on company profits all added to the improved outlook.

However, Westpac senior economist Matthew Hassan said he doesn’t expect the good conditions to be sustained over the rest of the year because of falling commodity prices and slowing mining investment.

“The non-mining parts of the economy – housing and the consumer in particular – will provide some offsetting improvement,” he said.

“Our fear though is that ongoing weakness in non-mining business investment and a poor global backdrop means the overall mix will not be enough to counter the drag from the mining sector.”

The Westpac-Melbourne Institute Leading Index, which indicates the likely pace of economic activity three to nine months in the future, was 3.9 per cent in March, comfortably above the long-term trend of 2.8 per cent.

The Coincident Index, which measures current economic activity, was 2.7 per cent in March, slightly below the long term trend of 2.9 per cent.

Westpac expects the Reserve Bank of Australia to keep cutting the cash rate, saying it will fall to two per cent by early 2014, from its current level of 2.75 per cent.

The bank reduced the rate by a quarter of a percentage point at its May board meeting after making four cuts in 2012.

Mr Hassan expects the RBA to make another cut at its June 4 board meeting.

“Despite today’s above trend read on the Leading Index, the bank’s June decision will be more heavily influenced by the outlook for business investment,” Mr Hassan said.

The Australian Bureau of Statistics releases data on private new capital expenditure and expected expenditure on Thursday, which will prove critical, he said.