Business conditions have slumped to their lowest levels in three years - and things could get worse in the months ahead.
However the gloomy outlook does not guarantee a pre-Christmas interest rate cut from the central bank in December, a survey says.
The National Australia Bank (NAB) monthly business survey, released on Tuesday, showed business conditions in October fell two points to minus five on the index.
Business confidence also dropped on point to minus one in October.
NAB said the decline in conditions reflected weaker conditions in the mining, manufacturing, wholesale and construction sectors.
On a state-by-state basis, confidence levels deteriorated across the country while Queensland and NSW recorded the worst business conditions.
And NAB doesn't see a change in the near future.
"Consistent with the subdued level of business conditions in October, forward indicators of demand (especially forward orders) and employment remained well below average levels, pointing to little improvement in near-term activity," NAB said.
Forward orders rose marginally, to minus five in October from minus seven the previous month.
NAB said the drop in business confidence was mainly prompted by global concerns, including a belief that US Federal Reserve and European Central Bank economic stimulus measures had not solved those economies' wider problems.
It added that the Reserve Bank of Australia's (RBA) decision in October to cut the cash rate a quarter of a percentage point to 3.25 per cent may have highlighted underlying concerns about the domestic economy.
However, NAB does not expect the RBA to cut rates again until February - and then only by a quarter of a percentage point to help mitigate weakness in near-term demand.
But JP Morgan economist Ben Jarman said the central bank could still cut in December, given the implications of weak business conditions on the wider economy.
"With the mining capex boom winding down over the next year or so, the remainder of the (considerably more numerous) firms operating in the non-mining economy need to wake from their slumber," he said.
NAB also released its forecasts for global and Australian growth on Tuesday, saying it expected activity to remain sluggish overall, with Australia's economy weakened by a high exchange rate and the slowing mining boom.
Its forecasts for Australian gross domestic product was unchanged at 2.3 per cent for 2012/13, below Treasury and RBA's expectations of three per cent.
Global growth would be 3.1 per cent for 2012, and 3.3 per cent for 2013.