The Thai Industry Sentiment Index (TISI) fell in February to 90 points from 90.6 the previous month as people remained cautious about spending amid high household debt, says the Federation of Thai Industries (FTI).
Sluggish demand led to a drop in purchase orders, production volume and business operation results.
"The TISI indicates the domestic economy has yet to recover. February has fewer working days, which also affected the indicator," said Isares Rattanadilok Na Phuket, vice-chairman of the FTI.
The FTI has been calling on the government to boost the economy with new stimulus measures to relieve the impact of the delay in budget allocation in fiscal 2024, which started in October last year and will run until the end of September this year.
The government said earlier the parliamentary session to consider the budget bill should be completed by April.
Mr Isares suggested the government boost the economy through new tourism promotion projects in secondary tourism cities.
"We want the government to come up with new measures to boost people's spending, especially in the tourism sector," he said.
Authorities also need to continue measures to lessen the impact of high energy prices on households and businesses, said Mr Isares.
The diesel price subsidy programme, which keeps the retail price of diesel below 30 baht a litre, should be extended after it is slated to expire at the end of this month.
This will be good for motorists and businesses in the logistics sector.
The government should also further maintain the price of liquefied petroleum gas (LPG), which is used as cooking gas by households, at 423 baht per 15-kilogramme cylinder after the LPG subsidy programme is set to end on March 31.
Mr Isares also asked the government to have more small and medium-sized enterprises (SMEs) participate in state procurement projects.
Authorities should spend at least 50% of budget buying products and services from SMEs to better support the sector.