Business confidence in Western Australia is plummetting and has fallen to the lowest level since the global financial crisis, a series of new surveys shows.
The Survey of Business Expectations commissioned by the Commonwealth Bank and WA's Chamber of Commerce and Industry (CCI) found that in the September quarter just one in four WA businesses expected the economy to improve over the next 12 months.
The survey also found businesses were pessimistic about rising costs and wages coupled with less demand for services.
"Almost three quarters of businesses indicated the recent international global uncertainty was affecting their perceptions," CCI chief economist John Nicolaou said on Tuesday.
"This is not surprising, given the survey was conducted during the recent historic US credit rating downgrade and stock market volatility."
He said businesses also highlighted domestic economic issues, the carbon tax and wage costs as the most significant issues affecting their perceptions of the economy.
Mr Nicolaou said trading conditions continued to decline, hitting their lowest levels in two years, and the drop was being particularly felt by retailers and small businesses.
The survey found 35 per cent of businesses indicated their sales had fallen, while just one quarter of businesses reported higher sales, the lowest figure in many years, he said.
Forty-two per cent of businesses reported their bottom lines were shrinking, half reported an increase in wage bills and only a third expected to increase their workforce in the next 12 months.
Greg Caust, the Commonwealth Bank's WA General Manager of Corporate Financial Services, said that while there was significant long-term investment in WA's economy, the survey indicated businesses were feeling the pinch as consumers held back on spending.
"Overall, business remains pessimistic about the short- to mid-term future, with less demand for services coupled with rising costs and wages affecting confidence," he said.
The Sensis Business Index, also released today, showed more than a third of Western Australian small businesses were worried about their prospects for the coming year.
Report author Christena Singh said trading conditions for WA business was weak over the quarter, with sales dropping, profitability flat-lining and prices rising.
The report indicated 16 per cent of small businesses in WA were looking to close or sell their business over the next 12 months, while 41 per cent were planning to introduce new products or services.
Also released today was Bankwest's Business Challenges Survey, which found that 72 per cent of small businesses in Western Australia were facing more challenges compared to 12 months ago.
Bankwest Business chief executive Ian Corfield said 46 per cent of WA SMEs had experienced challenges retaining customers, while 54 per cent of businesses were struggling to attract new ones.
"Many SMEs in WA have said attracting and retaining employees is harder than a year ago which is a result of the labour market still being quite tight and also reflects pressures from the mining sector flowing to the rest of the economy," Mr Corfield said.