Data suggest jobless rate yet to peak

Finance Minister Mathias Cormann insists the economy is in a better position thanks to the efforts of the Abbott government.

Senator Cormann tried to return the focus on the economy on Tuesday after Prime Minister Tony Abbott's controversial decision to award a knighthood to Prince Philip on Monday.

He said the government has made significant progress in repairing the budget mess it inherited.

"The results are starting to show," he told reporters in Perth on Tuesday.

"We are in a better position now with prospects for stronger growth and more jobs as a result of our efforts so far."

However, new data would suggest the outlook is less upbeat.

The National Australia Bank's monthly business survey suggests there is "little to no" momentum building in the economy.

It found business conditions have now eased below their long run average while a broad-based fall in forward orders indicates soft demand will continue in the near term.

Importantly, NAB chief economist Alan Oster expects unemployment to deteriorate, peaking at 6.6 per cent late this year and cutting short the modest improvement to 6.1 per cent in December.

He still expects the Reserve Bank to cut the cash rate twice this year, already having been at an all-time low of 2.5 per cent since August 2013.

ANZ's co-head of Australian Economics, Felicity Emmett, is equally concerned that business confidence remains worryingly weak, despite a small uptick in December.

She said while there is speculation the RBA will move to cut rates at its first board meeting of the year next week, she expects it will only flag a change in policy and cut by 25 basis points at its March meeting.

Wednesday's consumer price index is likely to intensify talk of a rate cut.

The impact of a tumbling oil price is expected to limit a rise in the CPI to just 0.2 per cent in the December quarter.

This would leave annual inflation at 1.8 per cent and below the RBA's two to three per cent target band.

However, JP Morgan chief economist Stephen Walters is not totally convinced a rate move is on the cards.

"We still believe a weaker Australian dollar and lower petrol prices are doing much of the work for the RBA," he said.