One of the nation's largest banks is sticking with a 2012/13 economic growth forecast pegged below official predictions, after its latest business survey showed conditions at their weakest in over three years.
National Australia Bank (NAB) economists are forecasting economic growth of just 2.3 per cent this financial year, well below the three per cent expected by federal Treasury and the Reserve Bank of Australia (RBA) in their updated projections of the past couple of weeks.
NAB expects slowing mining investment, a still-high Australian dollar, the federal government's budget tightening and an ongoing weak global economy will weigh on activity.
Releasing its October business survey on Tuesday, NAB said the economy appeared to have "stumbled" into the December quarter with growth "clearly below trend".
Its business conditions index deteriorated further in October, down two points to minus five points, the lowest level since May 2009.
This was consistent with the economy travelling at a sub-trend pace - usually seen at around 3.25 per cent.
Business confidence also eased one point to an index of minus one, despite the RBA cutting the cash rate in October.
NAB suggested firms might be worried about the reasons behind the rate reduction, such as a high dollar and a soft labour market.
Declines in employment were one factor behind the fall in business conditions, with mining employment posting a significant 15-point drop.
The survey's capital expenditure index also fell to its lowest level since August 2009, "suggesting the brakes may be tightening on the business investment boom - especially mining".
"Mining conditions are currently the weakest they have been since the Queensland floods in early 2011, which caused major disruptions to coal mine production," NAB said.
However, a separate survey suggests the outlook may not be that bleak, predicting 137,000 jobs will be added to the economy by August next year, more than double the 58,000 people who gained employment in the year to August 2012.
The biannual analysis by consultants Economic and Market Development Advisors (EMDA) forecast a 10.6 per cent in employment in the mining industry.
EMDA's Michael Emerson, the author of MyCareer Employment Forecast November 2012, said while there were concerns about a slowdown in China and the mining industry, and a rise in unemployment, the overall outlook was "quite encouraging".
However, coinciding with the NAB survey, which showed a record 72 per cent of businesses say they don't currently require finance, new Australian Bureau of Statistics data showed lending down 1.8 per cent from a year ago.
Commonwealth Securities chief economist Craig James said that was a "disturbing development" for the RBA, given it had cut the cash rate by 1.5 percentage points in the past year.
"The Reserve Bank may have to cut rates to lower levels than in the past to revive growth, while the federal government may need to re-think the strategy to get the budget back in surplus in a year," Mr James said.