Not even super-low interest rates are tempting consumers and businesses out of spending hibernation.
Business confidence was flat in the September quarter, according to figures from the National Australia Bank on Thursday.
Forward orders eased, suggesting sluggish domestic demand, and while business conditions did rise, most of the gains came from a surprise jump in July which had since eased off, the report said.
NAB chief economist Alan Oster said expectations of any significant rebound in domestic demand were premature.
"Both consumers and business remain cautious about spending, despite encouragement from very low interest rates, which is unsurprising given slower rates of income growth," he said.
"Consequently, corporate leverage ratios are low and household savings rates remain high, although there have been signs of improvement more recently."
On the plus side, strong residential construction, boosted by low interest rates and strong investor demand, including foreign investors, would have flow-on effects to the rest of the economy, Mr Oster said.
Recent falls in the Australian dollar would also help export competitiveness, but could have a negative impact for some businesses, he said.
"With the Australian dollar expected to continue on a downward track over 2015, importing firms are likely to experience renewed pressure from purchase costs," Mr Oster said.
"However, for now, the removal of the carbon tax and lower energy costs are providing some relief for firms."
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