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AUSTRALIA is tending to follow the UK with a feeling of uncertainty about the global economy, domestic housing construction and the drought, all of which are casting a shadow over Australia's economic future, according to Australian business leaders.
The latest D&B Business Expectations Survey shows business owners and senior executives have performed an about-face from last month's bullish predictions, expressing caution in the face of economic uncertainty.
Importantly, executives have begun to cut back on investment plans, adopting a "wait and see" approach before committing to more spending.
The D&B survey of more than 1200 executives and business operators found 22 per cent of respondents expected an increase in capital expenditure in the September quarter, but 8 per cent now expected a cut to capital spending - 2 per cent more than the previous survey.
"Continuing global economic uncertainty and the future of the housing market are the two significant blips on the radar screen for most Australian companies right now," D&B Australian and New Zealand chief executive Christine Christian said.
"Our current survey suggests that executives are reacting to these issues and have started applying the brakes on capital investment plans."
The results of an Australian Chamber of Commerce and Industry survey also show that Australian business investment will slow over the next six months.
An index measuring the proportion of companies expecting to invest more during the next six months fell from 51.9 last year to 47.7 per cent.
"The survey adds to pressure for the Reserve Bank to give consideration over coming months to an interest rate cut," ACCI chief Peter Hendy said.
Against this, the Reserve Bank left interest rates at their previous level last month, instead of the 0.25 per cent cut widely expected.
But sales and profit expectations remain strong, with 51 per cent of respondents forecasting sales increases for the quarter and 47 per cent predicting their company's profits will rise.
D&B economic consultant Duncan Ironmonger said the survey indicated a stable outlook for inflation.
"Selling price expectations remain unchanged and actual price rises in the March quarter were also unchanged, which is good news on the inflation front," Dr Ironmonger said.
"An important indication of the easing inflation expectations is that retailers continue to have the lowest selling price expectations of all."