The election boost to business confidence has faded as firms continue to grapple with weak conditions and soft domestic demand.
Business sentiment last month fell back towards its pre-election levels after a surge of sentiment 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 Australian dollar shed three-tenths of a cent, falling to a six-week low of US93.40¢ on the weak data. The survey of more than 400 firms, published on Tuesday, found confidence fell to 5 points last month on the index, after a 3½-year high of 12 in September. Business confidence was at 4 points in August.
Conditions remained unchanged at minus 4 points for October, but were still an improvement from minus 8 in August.
Capacity utilisation shed 0.9 percentage points to 79.3 per cent - the lowest level since June 2009, and highlighted the "significant amount of slack in the economy", Mr Oster said. Forward 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 4 points to minus 6.
While sentiment lost its election shine, it was still higher compared with recent surveys, and remained near its long-run average.
Lower interest rates, a lower currency and improving asset markets were keeping 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 after 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 risen to its highest level since 2010.
Roy Morgan Research confidence figures out on Monday showed 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 as it appeared the Reserve Bank was comfortable with its monetary policy settings.