The latest NSW Business Chamber business conditions survey shows a significant deterioration in market conditions and business confidence in the Illawarra.
Results for the June quarter survey showed negative business confidence grew from around 30 per cent in the March quarter to 50 per cent in the June quarter.
Even with the drop in the Australian dollar, the June quarter was tough for businesses in the region and the present outlook was more pessimistic than the state average, according to Illawarra Business Chamber chief executive Debra Murphy.
"Expectations for the next quarter also remain relatively soft," she said.
"However, on a positive note businesses have reported an increase in export sales and we would expect that trend to continue with sharp falls in the value of the Australian dollar since April this year."
Businesses across the state also reported increasing business costs, particularly with electricity, wages, fuel and compliance.
Consumer confidence and the federal election were the other main factors that affected business performance over the quarter.
Key findings included a decline in sentiment about the overall performance of the NSW economy, a slight fall in expectations about future performance and a slight improvement in profits. However the negative score indicated there were still more negative than positive responses.
Business conditions and sales continued to move deeper into negative territory and the number of employees declined.
Investment also fell slightly.
Chamber policy manager Jancey Malins said the survey results showed why the Illawarra Business Chamber had joined a national pre-election campaign highlighting the important role small business had in the economy and the need to put them at the centre of political decision-making.