The Small Firms Association estimates that 8,875 new jobs will be created by the sector this year, around 1,000 more than anticipated this time last year.
Its annual employment survey covers just over 1,000 companies. The new jobs figure is a sharp drop from the 50,000 in its 2006 survey.
The SFA says skills shortages remain a big problem despite growing levels of unemployment.
Director Patricia Callan says a deteriorating international environment, exchange rate pressures, high inflation, labour and other costs are affecting firms' ability to create jobs.
The survey shows that 57% of firms are more likely to expand their business this year, but 66% of expansion plans are being affected by recruitment problems. 71% of companies have problems filling vacancies. 20% of firms made staff redundant in the last 12 months and 14% will do so this year.
