Notwithstanding the mining boom trumpeted by the federal government, Australia's business environment flashed plummeting figures in the September quarter, basing on the latest survey released on Thursday by the National Australia Bank (NAB).

From the plus five points posted in the June quarter, business confidence in the country suffered steep declines that pushed down the present levels to negative four points in the third quarter while business conditions were pegged at negative three points.

According to NAB analysts, Australia's business condition during the second quarter proved more stable at plus two points and bleak prospects from what's happening abroad largely spurred the dipping situation.

"Business conditions stumbled in the September quarter, reflecting an economy that it is still struggling to find traction, while activity is also seemingly being impacted by global influences," NAB chief economist Alan Oster said in a statement.

Also, business confidence retreated considerably in the last quarter as Oster noted of lingering "volatility in equity and financial markets, heightened fears about debt contagion in Europe and the deterioration in conditions."

With the latest data underscoring a generally tight economic picture but a more manageable inflation movement, analysts are much more leaning on a likely cut back on the country's cash rate, which has remained at 4.75 percent in the past few quarters.

Oster said that more and more economists are forecasting a policy rate drop that could take effect by November at the earliest, with Reserve Bank of Australia (RBA) earlier floating suggestions that inflation is the least of concerns among the country's economic managers.

Apart from guarding local indicators, the government is hard-pressed to monitor the European development, where a runaway debt and fiscal crises could expose the domestic economy to some form of economic hiccups.

Parallel with the overall declines seen in the business environment, NAB has indicated that investments lined up for 2012 could be dwindling in big ways and the only saving grace that the country can claim is the consistent performance from the resources sector.

"Conditions remained strongest in mining, followed by recreation and personal services and transport and utilities, while conditions were weakest in manufacturing, retail and construction," the NAB survey stressed.

Oster pointed out that by this time, Australia is now in a two-speed economy, in which mining activities fuel growth while at the same time its immediate effects - a soaring Australian dollar, the struggling retail and manufacturing sectors and consumers unwilling to spend - spell long-term headaches.

Moreover, with major economies around the world discounting growths in the near-term and surging interest rates preventing expansions, NAB analysts are painting a gloomy picture ahead.