Business confidence among small and medium-sized firms has improved, with more businesses optimistic about their business prospects than at any time over the last two years.
ISME's fourth quarterly business trends survey for this year says, however, that this increased level of optimism is not being reflected to any great extent in the underlying business trends.
Today's winter survey shows that while 21% of companies are still less optimistic about their business prospects, it is a better reading than the 37% in the previous quarter.
The manufacturing sector is the most optimistic, while the construction sector remains the most negative.
However, while business confidence is improving, the current business environment is viewed as 'poor' or 'very poor' by 74% of respondents, up from 69% in the previous quarter. 29% expect business conditions to improve over the next 12 months, the highest figure recorded this year.
The survey also shows that employment prospects among SMEs continue to improve, albeit from record lows. 35% of firms now expect to lay off people over the next 12 months compared to 39% in the previous quarter. However, just 8% of companies expect employment levels to increase.
ISME says that while the level of sales has increased in the last quarter, they still remain at 'extremely worrying levels'. 79% for SMEs say their sales are down on the same time, while just 9% of companies saw an increase in sales.
Smaller businesses are also continuing to see serious delays in payments, with the average waiting period now 75 days.
'The results overall are more positive than in the previous quarter, but huge concerns still remain,' commented ISME head of research Jim Curran.
He said that economic uncertainty is still a major challenge and remains the number one concern, followed by reduced orders and a lack of credit.
'With many small businesses currently faced with exorbitant costs, a reduction in consumer demand, late payments and a difficulty in accessing credit, the indications are that many will be reviewing their investment and employment position over the next couple of months, unless immediate action is taken to address these concerns,' he stated.
