Business confidence has edged lower in June, even as conditions improved slightly.
National Australia Bank's monthly business survey shows confidence down 1 point to -3, indicating there are still more pessimistic business operators than there are optimists.
However, the survey also showed a 3-point improvement in actual conditions to -1 - conditions in May had been at a three-year low.
The improvement in conditions was driven by solid rises in trading and profitability.
NAB's economists say the deterioration in confidence is mainly being driven by offshore factors.
"Confidence has again been eroded by the uncertainty over the outlook for the eurozone," he said.
"This and volatility on global financial markets is starting to impact on activity levels with the latest business surveys showing a softening in trading conditions in the big advanced economies." In a further worrying sign, forward orders slid to -8 which is the worst result in three years and indicates that conditions may again deteriorate.
The decline in forward orders was largely driven by the manufacturing sector, and weakness in this industry also showed up in a growing gap between strong business conditions in Western Australia (+27) and weak conditions in Victoria (-10).
Construction had the largest improvement in conditions last month, but was also coming off the lowest base and so remains the weakest industry at -16.
Manufacturing (-12) and wholesale (-5) were also weak, while retail recorded a solid improvement in conditions.
Mining (+14), recreation and personal services (+10) and transport and utilities (+9) were the strongest industries in June.