Weaker than expected business investment and forecasts of further falls have improved the chance of another rate cut.
Capital expenditure by business fell 2.2 per cent in the December quarter, a larger than expected drop, official figures show.
Macquarie Research economist James McIntyre said there is worse news on what businesses expect to spend in the future, and most of that weakness is in the non-mining parts of the economy.
"It's hard not to wince when you look at the expectations for 2015/16," he said.
"Rather than seeing a healthy pickup in non-mining capex, we're seeing that all engines are spluttering."
Investment expectations for 2014/15 are 8.6 per cent lower than the same estimate made 12 months ago, and expected spending in 2015/16 has dropped drop 12 per cent.
Mr McIntyre expects an interest rate cut by the Reserve Bank next week, and said the spending figures point to even more cuts in 2015 unless there is a turnaround for the economy.
"Most people, including the RBA, would not have been expecting the non-mining side of this capex to be as bad as it is," he said.
"The mining side is broadly in line with what the RBA had been flagging and anticipating but non-mining is a little below what many had hoped."
National Australia Bank chief markets economist Ivan Colhoun said the latest figures were disappointing, especially outside of mining.
But investment expectations figures in three months' time may paint a clearer picture, as they will not be clouded by uncertainty created by falling oil prices and a weakening Australian dollar, he said.
"I don't think it's the end of the world number," Mr Colhoun said.
"We're still looking for no move in rates before May."
ANZ senior economist Felicity Emmett said the figures show there is no sign of improvement in the economy.
"The ongoing weakness in the outlook will provide further confirmation to the Bank that the economy needs further stimulus," she said.
"We continue to expect another near term RBA rate cut, most probably at the March meeting."
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