The Dun and Bradstreet survey shows there was negative growth in sales and capital investment during the March quarter and employment growth was at its lowest since June 1992.

 

The survey found business executives are expecting the situation to get worse, with sharp drops in expectations for sales, profit and employment growth for the September quarter.

 

Dun and Bradstreet chief executive officer Christine Christian says most executives believe rising interest rates and fuel costs are behind the drop in consumer spending.

 

"They are anticipating that the challenges will only increase as we head into the second half of the year and we are really starting to now see an economic slow down," she said.

 

She says the business environment is much more challenging than it was 12 months ago.

 

Ms Christian says the Federal Government's plan to curb inflation by encouraging consumers to tighten their purse strings is having an impact.

 

"The retail centre continues to demonstrate the highest level of concern, as clearly the impact of the recent rate hikes are affecting consumer budgets and discretionary spending," she said.

 

"In fact almost 70 per cent of retail executives believe interest rates will have the greatest impact on operations in the quarter ahead."

 

"ABC News"