Conditions for businesses are the best they've been since the global financial crisis, but bosses are struggling to shake off their gloom.
The National Australia Bank's latest businesses conditions index recorded its biggest monthly gain in October, rising to its highest point since the GFC.
The index measures factors including employment, trading performance and profitability.
Despite the strong result, which was spread across all industries, business confidence levels dipped to their lowest level since shortly before the 2013 federal election.
NAB's economists described the fall as surprising and suggested it could be because firms remain uncertain about near-term demand in their industry.
While those in the services sector were the most optimistic, transport, utilities, mining and wholesale companies were filled with uncertainty.
Improved conditions for many businesses appeared to be driven by a lower Australian dollar and record low interest rates.
The dollar dropped to a low of 86.43 US cents in October, more than 10 cents below its high point for the year in July.
A weaker exchange rate makes exports cheaper, and locally made goods more competitive with dearer imports.
"With the Australian dollar dropping towards the mid-80s, it appears the currency has finally fallen enough to provide a boost to business conditions," UBS economist George Tharenou said.
But the fall in business confidence suggests the monthly rise in conditions may be overstated, he said.
Other indicators, including solid retail spending figures, hiring intentions and a rise in ANZ's job ads data, also confirm the economy is getting a boost from the lower Australian dollar, Mr Tharenou said.
CommSec chief economist Craig James said the removal of the carbon and mining taxes would also have eased costs for businesses.
"Unfortunately we will need to see confirmation of the strong result in the November business survey," he said.
If improvement continues, the Reserve Bank could hike the cash rate sooner than expected, Mr James said.
JP Morgan economist Ben Jarman said the surprise rise in business conditions could have been driven by a surge in retail spending in September, largely driven by the new iPhone 6.
"It appears that firms are viewing better conditions as temporary, or are at least reserving judgment on whether the improvement in outlook will transmit to their own bottom line," he said.
The mismatch between confidence and conditions suggests the strong surge in conditions may not last long, especially given consumers remain cautious and unemployment is still rising, NAB economists said.
