Australia saw its worst annual job growth in 19 years in 2011, but December showed the highest rise in business confidence in seven months, according to a National Australia Bank survey.

Consumers focused on savings due to growing concern over fiscal problems in the U.S. and Europe, slowing down businesses and putting growth on hold.

The confidence index was 3 in December from 2 in November, said a National Australia Bank survey of about 400 companies from January 9-13 that was released in Sydney on Tuesday.

The December business confidence was the highest since May 2011. But the business conditions gauge, a measure of hiring, sales and profits, was unchanged at 1, Bloomberg reported.

The Reserve Bank of Australia reduced the benchmark rate by a quarter percentage point on November 1 and again on December 6 as inflation pressures eased and risks to global growth increased.

"Business sentiment over recent months has been seemingly resilient to the weakness in Europe, which has contributed to a slowing in global activity, perhaps reflecting the effects of the RBA's recent interest rate cuts," NAB chief economist Alan Oster said in a statement.

Bloomberg reports RBA Governor Glenn Stevens lowered the overnight cash rate target to 4.25 per cent from 4.5 per cent in December, citing "considerable turbulence" in financial markets and an increased chance of a "further material slowing in global growth."

Borrowing costs are expected to drop again at the central bank's next meeting in February, according to a Bloomberg report.