More West Australian small businesses expect to close or sell this year than in any other state despite recording the highest sales, according to the latest Sensis Business Index.

The state's business confidence continued to shrink even though profitability and sales performance improved during the last quarter, the national survey found.

The confidence indicator is now at 28, compared to 31 in the December quarter.

WA recorded the strongest sales performance and the first positive reading in more than a year (7 per cent). The better results also were expected to continue into the next quarter.

But two in every 10 WA small businesses expect to close or sell within 12 months - the highest level in the country.

Almost one-third of all WA small businesses are worried about their prospects for the year ahead, while half are confident and the remainder are neutral.

A business expert warned last month that the expected introduction of Sunday trading from August would push thousands of small business owners to shut up shop and many others would never open.

Curtin University's Dr Paull Weber said small business owners would be forced to work the extra day themselves because of the high cost of wages, tipping their work-life balance too off kilter.

Recent progression towards Sunday trading detracted from businesses' approval of the state government during the March quarter, although that indicator still improved from -3 per cent to 8 per cent.

The Sensis Business Index found small businesses believed the government was trying to help them and approved of its training schemes. However, they were concerned about the cost of utilities and the perception that the Liberal National Government supported only large businesses.

Chamber of Commerce and Industry WA general manager of advocacy David Harrison said higher wages and utilities costs were impacting on businesses, while many remained concerned about wider economic impacts.

"The longer the concerns about the international economy continue the more it will impact on confidence," he said.

"Businesses and households are looking for some sort of light at the end of the tunnel or clarity that it will improve. We're not really seeing that.

"It's playing on people's minds and having an impact on how businesses run their operations and how they spend their money."

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