Illawarra businesses are shying away from making investments due to uncertainty around the federal election, according to the business chamber.
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The chamber's executive director Adam Zarth said business conditions has dropped sharply as the NSW economy slows down.
This is coupled with concerns about a possible change of government in less than two weeks.
"A surprising number of businesses are worried about the upcoming federal election," Mr Zarth said.
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"With the very real prospect of a change in government in Canberra, businesses appear uncertain about what it will mean for them.
A surprising number of businesses are worried about the upcoming federal election.
- Illawarra Business Chamber Executive Director Adam Zarth
"We are seeing this sentiment across the Illawarra-Shoalhaven as well as the Southern Highlands. As a result of the uncertainty, businesses are in a holding pattern and the breaks have been put on capital investment and business expansion."
In the latest quarterly survey of Illawarra businesses, 60 per cent reported less planned or actual investment since the December 2018 quarter.
That 60 per cent figure is 25 per cent worse than the NSW average.
Mr Zarth said figures for Shoalhaven and the Southern Highlands were better, but still below the state average.
"If these results are reflective of wider sentiment then we have cause for concern," Mr Zarth said.