The Industries Sentiment Index (TISI) for December dropped to 91.7 points from 92.3 in November, on a lower purchasing power and widespread drought affecting overall industrial and agricultural output, the Federation of Thai Industries reported.
FTI chairman Supant Mongkolsuthree said on Wednesday the drought could have a serious impact on farm incomes.
The export sector had suffered from the strong baht and the uncertain global economy from US-China trade tensions.
The FTI forecast is for the TISI to reach 100.1 over the next three months, which is down from the 101.3 points in its previous estimation.
"There are many difficulties facing both the local and global economies, while the increase in labour wages will increase companies' operating costs, SMEs in particular," he said.
US-Iran military tensions could also raise crude oil prices, increasing the cost of products and transport costs. Exporters would have to deal with that.
The industries sentiment survey in December polled 1,207 companies in 45 industrial sectors.