A surge in optimism among construction companies is keeping overall business confidence high.
The August reading of the NAB business confidence index came in at eight points, with readings above zero indicating optimists outweigh pessimists.
While the index dropped two points from a one-year high in July, JP Morgan economist Ben Jarman said business confidence remained high.
"Australia's NAB business survey had been surprisingly upbeat in July, but suffered some payback in August," he said.
"In the sector breakdown, mining representatives are keeping their chins up, despite the slide in commodity prices."
Confidence was strongest in the construction sector and Mr Jarman expects it will continue be the main driver of business confidence as the year progresses.
"The approvals data clearly show a bulge in the pipeline of residential building, and in construction of office and retail space, which will offset some of the mining capital expenditure decline," he said.
"But we doubt that is yet sufficient to lift demand conditions more broadly, and that sense is corroborated by the pullback in conditions reported today."
NAB's business conditions index fell to four points in August, after it hit a four and a half year high of eight points in July.
NAB chief economist Alan Oster said business conditions are higher than they were in 2013 but still below pre-global financial crisis levels.
"In large part, the decline in business conditions during the month reflects an unwinding of some of the narrowly based gains seen in July," he said.
"This was particularly stark in manufacturing, which dropped 13 points, following an 18 point improvement in July."
NAB predicts there will be no movement in the Reserve Bank of Australia's cash rate until late 2015.
UBS economist Scott Haslem said it looks like the economy will be stronger in the second half of 2014, and that means the end of the RBA's period of interest rate stability is getting closer.
"Conditions remain well up on their average in the first half of 2014 while confidence stayed around the robust level reached after last year's election," he said.
"Importantly, the jobs outlook remained intact, while the rebalancing back toward non-mining sectors remains on course."
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