Business confidence is "very much in negative territory" in the Orana and Far West region and has taken a hit across the state because of a triple threat, the NSW Business Chamber's latest research shows.
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The combined impact of drought, weak household demand and, more recently, bushfires is being blamed for the December quarter conditions, which the peak body reports are the weakest in 10 years.
Local respondents to the chamber's business conditions survey indicated expanding the capacity of their business to meet demand was becoming less important, at a level more marked than in any other region in NSW.
In terms of changes in key priorities between October and December, growing revenue and reducing costs were becoming even more important in the Orana and Far West, as indicated by the 13 survey respondents.
The result for those two indicators was more pronounced in the Orana and Far West than in any other areas of the state.
Western NSW Business Chamber regional manager Vicki Seccombe said business confidence was down right across NSW.
"Our survey underscores the impact of broader economic challenges such as drought and weak consumer spending which were hurting businesses even before the bushfires," she said.
"This triple threat of the bushfire disaster, drought and weak household demand is hurting business.
"The declines were seen across the board, with respondents' perceptions of the performance of the economy down, and indicators such as staffing and capital spending also falling sharply.
"There are no surprises locally, the Far West and Orana results are very much in negative territory and the Central West is slightly better but still in the same negative territory."
Ms Seccombe said the results were particularly disappointing because the latter part of the year normally offered a welcome boost to trade.
"Lacklustre revenues are reflective of weak household spending, with recent data indicating a large proportion of the most recent personal income tax cuts are not being spent," she said.
"While the labour market remains robust, we're concerned about the number of businesses reporting that they were shedding staff.
"We need to get behind our local businesses because our communities depend on them for employment and economic opportunity.
"Our bushfire and drought-affected communities are resilient and we need to be optimistic and back ourselves.
"The best way we can support affected communities is by buying local which supports businesses and their employees.
"The chamber has welcomed the support offered to businesses affected by the bushfires and the drought, and we look forward to further initiatives to help economic recovery and business confidence in affected regions."
The survey's authors note it only partially captures the impact of the bushfires, with the survey period preceding the deterioration of conditions in late December and January.