File photo ... A man walks by closed businesses in Garema Place.

A man walks past closed businesses in Garema Place, Civic. Photo: Andrew Sheargold

Business confidence in the capital has plummeted to its lowest levels in more than three years, according to a new report.

Confidence levels among small and medium businesses in the ACT dropped 31 percentage points over the quarter, the largest fall of all states and territories, according to the November Sensis Business Index.

While retailers have their hopes pinned on a successful Christmas and post-Christmas sales period, 24 per cent of surveyed businesses are expecting a drop in sales values over the next three months.

The report's author Christena Singh said there were concerns that consumers weren't spending, with the survey recording that negative expectations among businesses had almost doubled from August to 30 per cent of those surveyed.

Positive expectations had also dropped from 62 per cent of businesses surveyed in August to 45 per cent in November.

Ms Singh said it was common to see spikes and troughs in confidence around election periods, though the recent plunge had taken confidence levels in the capital to below the national average.

''Over the next few months, businesses are a bit pessimistic about sales,'' she said.

''Over the year though we're hoping to see some improvement.

''There will hopefully be some improvement, but it won't be easy.''

Business and consumer confidence were still weak after declining in the lead-up to the ACT election, chief executive of the ACT and Region Chamber of Commerce and Industry Chris Peters said.

Mr Peters said confidence levels had bounced back following the October 20 vote, but were still being overshadowed by the federal election - particularly given the large number of public servants living and spending in Canberra.

''Understandably, most of them are feeling less than secure about their future,'' he said.

''I think it's going to stay that way until the next election.''

Mr Peters said although the overall economy was strong, retail and hospitality in the capital were hurting.

''There will be some improvement in retail in the lead-up to Christmas,'' he said.

''That will continue through the post-Christmas sales, but will drop towards the end of January.''

The upcoming spending period would be vital for retailers throughout the capital, Mr Peters said.

''Christmas is always a critical time for retail,'' he said.

''They make most, if not all, of their profit over Christmas and the post-Christmas sales.

''Their survival depends on the next few months.''

The November Sensis Business Index said that the ACT recorded the lowest sales and profitability performance indicator of any state or territory in the last quarter, as well as the lowest performance indicators in wages and prices.

Support for the policies of the ACT government fell among small and medium businesses during that time, but remains above the state and territory average.