Australia's services industry is struggling and businesses fear a tough budget will further dampen activity.
Only health and community services, and finance and insurance services experienced growth in April, while the remaining seven sub-sectors contracted, figures from the Australian Industry Group show.
The Performance of Services Index fell 0.3 points to 48.6, below the 50 level that separates expansion from contraction.
Ai Group chief executive Innes Willox said the sector had unwound the gains made late 2013.
He said businesses had expressed concern over potential spending cuts and tax increases in the federal government's May budget.
"There is, clearly, apprehension in the business community that next week's budget will stifle economic activity," Mr Willox said.
"The contraction in sales, new orders and employment in the large services sector suggests the overall economy is clearly struggling to find sufficient alternative sources of expansion to offset the impacts of the slowdown in mining-related investment."
The report said businesses were particularly concerned about policy uncertainties surrounding major capital projects and government-run programs which could significantly affect demand for business-related services.
The retail sector continued to decline amid consumer concern about the economy and businesses said consumer uncertainties about the economy and potential government budget cuts were already affecting demand for personal and recreational services.
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