Australian business conditions weakened in the three months to June, according to a private survey.

The National Australia Bank (NAB) quarterly survey showed the business conditions index for the June quarter was minus one, from plus three in the March quarter – putting it just below the long term average.

Business confidence was marginally down – registering an index of minus two from minus one in the March quarter.

Negative headwinds from Europe appeared to have overwhelmed any optimism following the two recent rate cuts from the central bank, according to NAB chief economist Alan Oster.

“At the time the survey was conducted, business confidence appeared to have reacted negatively to the uncertainty emanating from overseas economies,” he said.

“In particular, concerns about the future of the euro zone and stability of European banking systems.

“Furthermore, the sizeable depreciation of the Australian dollar over the three-month period appears to have provided little relief to those industries exposed to currency movements, including manufacturing and mining.”

Official data for the June quarter has also suggested a slight weakening in the domestic economy, compared to the previous three months – and this was reflected in the softer reading for business conditions.

“Part of the deterioration in conditions may reflect a weakening in overseas demand for our exports due to the more uncertain global environment, as well as a material softening in domestic demand,” Mr Oster said.

“The impact to spending from the RBA’s (Reserve Bank of Australia) 125 basis point in cash rate cuts since November last year is yet to appear.”

The RBA cut the cash rate by half a per cent in May and a quarter of a per cent in June, before leaving it steady at its meeting on July 3.

In the minutes of its July meeting, released on Tuesday, the RBA noted an improvement in domestic economic data.