Business sales figures across Australia posted disappointing numbers in July, according to a survey done by Commonwealth Bank on 200,000 merchant facilities.

Commonwealth Bank's Business Sales Indictator index fell 0.8 percent in July in seasonally adjusted terms, after a decline of 0.5 percent recorded in June.

Cautious and wary consumer spending had characterized the economy pulling down the confidence among small to medium and even the large business owners in the retail and manufacturing industries.

The data showed that amusement and entertainment continued to be the strongest category (up 1.9 percent), with wholesale and manufacturers up 1.2 percent, and transportation up 0.7 percent.

It also pointed out a 2.2 percent trend decline in vehicle sales (still somewhat affected by the disruption in supply caused by the Japanese earthquake), a 1.2 percent fall in 'miscellaneous stores', and a 0.8 percent fall in mail/telephone order providers.

In New South Wales sales were down 1.2 percent in July, while the ACT had the strongest rise in sales of just 0.2 percent.

The present conditions in the Australian economy will provide a gloomy backdrop to the next rate setting of the Reserve Bank, which has taken a cautionary stance and has held further upward adjustments to the benchmark interest rates.

According to Commonwealth Securities economist Savanth Sebastian Australia's economy has been in a stupor and may not show significant improvements until the first quarter of 2012.

"The Australian economy is fast grinding to a halt. The housing sector has come off the boil, manufacturing services and tourism are seeing significant weakness," he said.

"You look at market volatility on a global front, and that's seen consumer sentiment slide to some of the most pessimistic levels we've seen in two years. So it does look like the Reserve Bank is firmly on the interest rate sidelines."

Savanth Sebastian says the bank's figures reinforce that bleak outlook, showing consumers are becoming increasingly reluctant to spend.

"This is more a choice rather than a necessity - you look at the household savings ratio at the moment and its at a 24-year high," he explained.

A related report from ABC News Online said that consumers are feeling a bit uncertain about the current environment, fearful of the next round of the world recession and its effects.