The recent battle to lead the federal Liberal Party has done little to inspire confidence in business.
NAB's influential business survey found confidence across sectors dipped below its long-term average in the wake of the challenge that saw Scott Morrison replace Malcolm Turnbull as leader.
The week-long survey commenced on August 24, the day of the spill.
August's fall in confidence occurred despite a rebound in business conditions which had been softening in recent months.
Confidence fell in all states, except for Queensland and Western Australia, which were flat.
Tasmanian businesses had the gloomiest outlook, followed by New South Wales and Victoria.
While Tasmanians may be a bit glum, the survey found they enjoyed the most favourable business conditions, followed by Queensland and Victoria. Conditions were weakest in South Australia.
NAB chief economist Alan Oster said overall the survey's key finding was a stabilisation in business conditions.
"Business conditions regained some of the ground lost in recent months and have been well above average for some time," Mr Oster said.
The survey was propped up by solid contributions from mining and manufacturing and while there was some improvement in retailing, conditions in the sector remained negative.
"Most of the remaining industries saw declines in the month — with conditions in the construction sector declining noticeably," Mr Oster said.
The more positive news was forward-looking indicators — such as forward orders and capacity utilisation — improved, after recent months of weakness.
The employment index pointed to continued strong jobs growth in excess of 20,000 jobs a month for the next sis months, the survey found.
"The stabilisation of the forward looking indicators provides some comfort that while business conditions have eased from the levels seen in early 2018, the outlook remains positive," Mr Oster said.
"In combination with a rebound in business conditions this month, this suggests that the business sector has continued to perform strongly as we enter the second half of 2018."
