The early, steady pace of Connecticut’s economic recovery slowed significantly this year amid concerns about the national economy, state tax increases and consumer uncertainty, according to the results of the 2011 Survey of Connecticut Businesses.

Published by the Connecticut Business & Industry Association and the accounting, tax and consulting firm BlumShapiro, the survey found that while hiring and profits are up, concerns about the state’s competitiveness are growing.

The annual survey takes the pulse of Connecticut’s business community, identifying issues and trends within the state’s economic, fiscal, and regulatory climates.

Since 2010, the state showed mixed progress in recovering from the recession. However, steady gains through the first quarter of 2011 eroded significantly by the third quarter of the year.

CBIA president and CEO John R. Rathgeber stressed the importance of business and government leaders working together to develop solutions. He noted that while the economy continued to struggle, Connecticut’s solid economic base had great potential for creating and retaining jobs in the state.

“We’re very pleased and encouraged that the Governor is calling lawmakers into session to address the creation and retention of jobs in Connecticut,” Rathgeber said.

“It is crucial that policymakers now forge a better relationship with the state’s business community and advance policies that inspire business confidence, strengthen our economic base, and attract new investment.”

Rathgeber’s comments were echoed by BlumShapiro partner Janet M. Prisloe, who pointed out that profit reports from the manufacturing and distribution sector, vital to the state’s economic success, were an encouraging sign.

“Our legislators need to provide the proper incentives to business leaders so that they invest and grow their businesses in Connecticut versus other states,” she said.

While the 2011 survey revealed continued improvement in business performance, it uncovered a serious lack of confidence among businesses, with only 27% of those surveyed rating current conditions as excellent or good.

“The good news is that Connecticut businesses have been able to generate sustained profits while maintaining healthy levels of productivity over the last year,” said Don Klepper-Smith, chief economist at DataCore Partners.

“The bad news is that business confidence faces an uphill battle brought on by political infighting in Washington, higher state and local taxes, and growing consumer uncertainty.”

More than half of those surveyed said reducing the size of state government and making it more efficient was the single greatest action policymakers could take to spur long-term economic growth.

Incentives for business startups, growth, and relocation and transportation infrastructure improvements also were cited as priorities.

Other suggestions included lifting the regulatory burden on business, expanding and improving vocational training, providing tax credits for new hires, reducing healthcare costs, and improving access to financing.

The 2011 Survey of Connecticut Businesses was emailed to 5,027 businesses in late July 2011. There were 707 responses, for a return rate of 14 percent and a margin of error of plus or minus 3.75 percent.