The election boost to business confidence has faded as companies continue to grapple with weak conditions and a soft outlook for domestic demand.
Business sentiment in October fell back towards its pre-election levels after a surge in September. Business conditions extended their poor run despite the strengthening housing market, bullish equities and the low interest rate environment, the National Australia Bank's monthly business survey found.
"Businesses may have reassessed their expectations about future activity in the changed political environment given the continued weakness in actual business conditions," NAB chief economist Alan Oster said.
"Forward indicators do not paint a favourable picture for the outlook, with capacity utilisation falling to a four-year low and the level of forward orders, capex and stocks also declining."
The dollar shed three-10ths of a cent, falling to a six-week low of US93.40¢ on the weak data. It was buying US93.35¢ in late trade.
The survey of more than 400 firms, published on Tuesday, found confidence fell to five points last month on the index, after a 3½-year high of 12 in September. Business confidence was at four points in August.
Conditions remained unchanged at minus four points for October, but were still an improvement from minus eight in August.
Capacity utilisation shed 0.9 percentage points to 79.3 per cent — its lowest level since June 2009 - and highlighted the "significant amount of slack in the economy", Mr Oster said. Orders and labour costs growth also softened.
Employment and trading conditions strengthened for the month, but were weighed down by profitability, which wound back some of its September gains to fall from minus four points to minus six.
Sentiment lost its election shine but was still at elevated levels compared with recent surveys, and remained around its long-run average.
Lower interest rates, a lower currency and improving asset markets were keeping overall confidence higher than the below-average levels seen over the previous three years, Westpac senior economist Justin Smirk said.
Conditions improved in the mining sector through rising commodity prices and lifted in the transport and utilities and retail and manufacturing industries.
The survey contrasted with other recent business indicators. The Australian Industry Group's construction industry gauge, released last week, found the sector had lifted to its highest level since 2010.
Roy Morgan Research confidence figures released on Monday showed that the almost 3000 businesses surveyed were more optimistic about their financial future, with the monthly measure jumping to a record high in October.
Mr Oster said the bank was pushing out its next interest rate cut forecast to May 2014.