THE level of job losses among small businesses is slowing, with one in three firms expecting conditions to improve this year.
Small business group ISME’s first quarterly trends survey for 2010 also found that although there has been an improvement in confidence, the business environment is still viewed as “extremely challenging”.
Two out of three firms are concerned about the survival of their business and the main areas of concern remain economic uncertainty, reduced orders, access to credit and late payments.
Optimism among small firms is now at its highest level since the third quarter of 2007.
The services sector is the most positive, followed by manufacturing, retail, construction and distribution.
ISME head of research Jim Curran said: “The survey results confirm that SME businesses are less pessimistic about their business prospects than at any stage since the recession began.
“This is reflected in a general improvement in employment, investment, sales and exports values.
“The findings are cautiously optimistic but need to be tempered by the fact that they are being compared to historically poor performance figures.
“They do indicate that there is some light at the end of the tunnel, but there is still a long way to go before we can see any appreciable evidence of actual growth in the sector.”
The current business environment is viewed as “poor” or “very poor” by 65% of respondents, down from 74% in the previous quarter.
The number of companies reducing employment is down on previous quarters, with 45% of companies decreasing numbers in comparison to 58% in the previous quarter.
The largest number of job losses was in construction, followed by distribution and manufacturing.
The survey found that 11% of firms are expecting to increase employment in the coming year compared with 8% in the previous survey. In addition, 26% are anticipating further job losses, down from 35% in the previous quarter.
More than two out of three companies are anticipating a reduction in sales over the next 12 months, with 12% expecting a rise.
Business costs continue to increase in many areas with hikes reported for transport, energy, raw materials, insurance and waste.