Canberra businesses are becoming increasingly confident about the health of the economy and remain the most optimistic in the nation, a survey has revealed.
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But support for the federal government and a surge of positivity after a change in Prime Minister has waned.
The number of small and medium businesses who thought the economy was growing rose from 16 per cent to 21 per cent this quarter, above the national average of 13 per cent, the annual Sensis survey of 1000 businesses from across Australia revealed.
At a time when more than a third of the 1000 Australian businesses surveyed felt the economy was slowing (35 per cent), less than a quarter of ACT businesses (23 per cent) shared the pessimism.
Sensis chief executive officer John Allan said business expectation was also looking strong for the quarter, with the ACT holding the most positive outlook for employment, prices and profitability.
"Positive wages and prices results helped influence confidence, while on the other hand there were negative ratings for sales, employment and profitability," Mr Allan said.
"A lack of work or sales again dominated as the key concerns for SMBs, while half reported barriers to taking on new staff."
Business confidence had a dramatic upswing in the 12 months up to October last year, when Canberra went from being the least confident to the most optimistic in the nation.
"Confidence has lifted above the national average and it is now more than twice the level recorded one year ago, when it displayed the lowest confidence levels," Mr Allan said.
"Businesses are positive about their own unique strengths which are helping to boost confidence."
Sales were flat and profitability declined in the ACT last quarter but expectations for this quarter on all of the indicators are positive, the survey said.
Support for ACT and federal government policies dropped among businesses.
Nationally, businesses who felt federal policies were supportive dropped from 27 to 25 per cent.
The ACT remained the second most popular government for businesses but Canberra businesses were the third most negative towards the federal government.
"Favourable opinion towards the ACT government is influenced primarily by the efforts to reduce bureaucracy and red tape, although some SMBs feel the government fails to understand their needs," Mr Allan said.
The "halo effect" of a new Prime Minister seen last survey appears to have evaporated, Mr Allan said.
In the December survey 8 per cent of businesses spontaneously mentioned the new Prime Minister as having a positive impact on their perceptions, but the figure is now less than 1 per cent.
"The government's rating is currently 14 points better off than it was at this time last year, placing it in a good position with small and medium businesses as we possibly head to an early election," he said.
Across industry sectors there were mixed results.
Health and community services lost some ground but remained in top spot, while transport and storage fell eight points to last place.
Northern Territory businesses were the least confident, with just 2 per cent feeling the economy was growing, but at 5 per cent Western Australia had the biggest drop in confidence from the previous quarter.
