A sharp drop in confidence among medium-sized businesses can be blamed on uncertainty ahead of the federal election, a survey says.
Commonwealth Bank of Australia's (CBA) Future Business Index found 70 per cent of respondents cited uncertainty over government policy as having the biggest impact on confidence over the next six months.
"History tells us that an impending federal election generates conservative business conditions and the findings of the index are consistent with that," CBA executive general manager of corporate financial services Michael Cant said in a statement on Wednesday.
Overall, the index showed business confidence tumbled 7.8 points in the June quarter to a six month low of 5.2 points, despite having risen in the previous two quarters.
The survey polls 427 financial decision-makers in both public and private companies with a turnover of $10 million to $100 million.
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More than two-thirds of respondents said rising energy costs were hurting business conditions, while 58 per cent blamed rising fuel costs and 57 per cent increasing wages. Just under half blamed carbon pricing.
CBA chief economist Michael Blythe said the results also reflected ongoing global uncertainty, volatile financial markets and a fluctuating Australian dollar.
As well, businesses see less chance of domestic demand driving future growth.
"Those surveyed are increasingly reliant on the idea that government policy change will ride to the rescue," Mr Blythe said.
Confidence among industry sectors was mixed.
Construction recorded a 15.3 points index jump but transport and logistics and agriculture slumped by 33.1 points and 38.5 points, respectively.
Among the states, Western Australia's index dropped 22.7 points, while the South Australian and the Northern Territory area saw the strongest rise, up 5.1 points.
