Business conditions in Australia back-pedaled sharply in February reversing around half post election gains, a widely-watched monthly business survey released on Tuesday by National Australia Bank (NAB) found. The NAB monthly business survey shows business conditions dropped five points to zero index points in February, while business confidence eased off slightly in the month, falling two points to seven index points. NAB says business confidence softened in the country in February but remains marginally above trend levels, suggesting firms remain hopeful of a recovery despite mixed signals on business activity. "As expected, the sharp turnaround in manufacturing recorded last month was largely unwound, and is now more consistent with the difficult environment that continues to face Australian manufacturers," the report noted. "The next largest deterioration came from wholesale (now very weak), followed by services industries." The survey found the biggest improvement in conditions in February came from the transport and utilities industry. Employment conditions fell from a neutral reading of zero to minus six in the month. "Employment conditions are sobering -- having reversed nearly all post election gains and pointing to further labor market deterioration," the report said. The bank expects Australia's gross domestic product (GDP) growth for 2013/14 to be at 2.7 percent and 3.0 percent for 2014/ 15. NAB also expects unemployment to continue to rise, and hit 6.5 percent by late 2014 and stay higher for longer.