Industrial confidence hit a 56-month low in February, and domestic car sales and production also fell as the protracted political turmoil hurt domestic consumption.
Payungsak: State help for SMEs needed
The Federation of Thai Industries (FTI) said the Thai industries sentiment index, which measures industrial confidence, fell to 85.7 points last month from 86.9 in January.
A reading below 100 points reflects low confidence in the business outlook among local entrepreneurs.
FTI chairman Payungsak Chartsutthipol blamed the drop in industrial confidence on growing concern about the continued political problems that remain far from an end, hurting domestic consumption and consumer sentiment.
The purchasing power of farmers also shrank, and small and medium-sized enterprises (SMEs) are facing higher production costs.
The FTI predicts that the overall confidence index in Thailand will stand at 98.4 points in the next three months, down from 100 in January.
Mr Payungsak cited declines in purchase orders and higher production costs as key factors.
"The FTI is urging the public sector to speed up tackling the existing political conflicts for the sake of the whole country and find ways to give SMEs greater access to funds to address their liquidity crunch," he said.
"In the meantime, border trade should be promoted and beefed up to expand Thailand's trade and investment opportunities, and the shortage of skilled workers and unskilled labour in the industrial sector should be addressed."
In related news, domestic car sales totalled 71,680 vehicles last month, down by 44.8% year-on-year, with output falling by 24.3% to 173,506, according to the FTI's automotive industry club.
But sales and production recovered slightly from January, with sales rising by 4.6% and output by 6.7%.
Thailand's automobile exports continued to climb last month, up by 0.5% year-on-year and 20% month-on-month to 46.1 billion baht.