(Adds more details on growth in July, context on slowdown)
LIMA, Sept 15 (Reuters) - Peru's economy expanded 1.16 pct in July from the same month a year earlier, marking the start of an expected recovery from the Andean country's worst economic slowdown in five years, the government said on Monday.
The official result was below analysts' expectations of 1.95 percent expansion, but better than the 0.3 percent year-on-year rate in June.
In July of last year the global minerals exporter posted a 5.05 percent surge.
Lower mineral prices, tumbling gold output and ebbing private investment have since dampened growth, leading to 2.98 percent expansion so far this year.
Peru logged 6.4 percent average annual expansion in the past decade, thanks to high global commodity prices and strong mining activity.
As in previous months, growth in July was led by domestic demand but pulled down by contractions in Peru's key mining and manufacturing sectors, which together make up about 30 percent of gross domestic product.
The government said that the result for July shows economic growth picking up after June, when the economy logged its slowest growth rate since October of 2009.
"An inflection point is observed, with the lowest point in June," said Alejandro Vilchez with the state statistics agency Inei.
Peru's economy is widely expected to perform better in the second half of 2014 than in the first six months of the year.
However, the central bank cut the key interest rate last week to counter signs of weakening consumption and said the recovery will likely be slower than previously forecast.
The economy in July expanded 0.2 percent at a seasonally-adjusted rate from June.
Late on Sunday, Peruvian President Ollanta Humala replaced his long-standing finance minister Luis Miguel Castilla in a surprise shake-up as criticism of the government's handling of the economic slowdown mounted.
The new finance minister, Alonso Segura, who was Castilla's chief adviser for a year and a half, said the economy will likely grow by under 4 percent this year - below the previous official forecast of 4.2 percent.
Segura, who is widely seen as continuing the orthodox economic policies of his predecessor, said he will evaluate new measures to jumpstart economic growth.
The economy grew by 4.4 percent in the past 12 months through July from the same period a year ago, Inei said.
The unemployment rate in the June, July and August period remained largely stable at 5.9 percent.
In July on the year, retail activity rose 4.2 percent, fishing 13.5 percent, and agriculture 1.63 percent.
But construction activity fell 6 percent - the sector's first contraction in two months - on fewer private projects, mining facilities and public works, said Inei.
Manufacturing dropped 5.7 percent on a dip in the processing of precious metals, oil, furniture and clothes.
And mining activity shrank 3.9 percent, largely on a 20 percent drop in gold output.
Peru's mining production has been hurt this year by aging mines, a government crackdown on illegal mining, lower ore grades at copper mine Antamina and the slower-than-expected ramp-up of mega copper mine Toromocho .
Reporting By Mitra Taj; Editing by Chizu Nomiyama and Andrew Hay