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Uncertainty about the outcome of the federal election and potential changes to industrial relations laws have caused a record fall in business confidence, a survey shows.
Confidence among small businesses has dived to its lowest level in six years, but their support for John Howard's Coalition government rose to its highest level in more than a decade, because of WorkChoices.
The Sensis Business Index quarterly survey, based on interviews with 1800 small business operators, showed the business confidence indicator had fallen 16 percentage points to 43 per cent. Report author Christena Singh said confidence was down as small businesses worried about the prospects of the government changing.
"We have never seen such a dramatic one-quarter fall in confidence in the 14 years Sensis has been tracking small businesses," Singh said.
"And this takes business confidence to the lowest we've seen in six years."
One-third of small and medium businesses in the survey, conducted in October and November, were worried about how electoral uncertainty and a possible change of government would affect their business prospects.
Some 13 per cent of respondents were worried about how their business would fare against competition.
Meanwhile, support for the federal Government jumped by nine percentage points during the quarter, taking the indicator to 29 per cent.
SMEs said WorkChoices industrial relations laws were the main reason they supported the federal Government.
"At the same time, we have seen a noticeable spike in support for the federal Government amongst small businesses, with support now at the highest level since May 1996," Singh said.
With unemployment at three-decade lows, the cost of wages indicator grew by one percentage point to 16 per cent, taking it to its highest level in two years.
Singh said trading conditions had deteriorated during the quarter for small businesses, reversing many of the rises recorded during the previous 12 months.
The sales indicator fell four percentage points to 15 per cent, returning the indicator to the same level as November 2006. Profitability also fell marginally, with the indicator down one percentage point to 11 per cent, the same level as the corresponding period in 2006.
- AAP
Low blow
* Small business confidence is at its lowest level in six years.
* Drop in confidence is the greatest in 14 years of surveying.
* Trading conditions have slipped in the past 12 months.
* Small business support of the Howard Government is up.
