Export performances dominate the findings with values at the highest level in three years.
The fourth quarter survey published yesterday by ISME found economic uncertainty, reduced orders and access to credit were the main concerns.
The results were based on over 700 responses, and confirm some improvement in key trends on the previous quarter.
The figures show business confidence in the last quarter improved, but is still low. More companies than before said they plan to increase investment over the coming months.
The latest findings show jobs are continuing to be lost, but at a slower pace.
Operating costs continue to be an issue with increases in transport, energy, waste and insurance still causing difficulties.
“Economic uncertainty, reduced orders and access to credit remain the biggest concerns for the majority of small companies,” the latest business update said.
Though picking up, confidence remains negative overall, with a net 13% of companies less optimistic about business prospects compared with 23% for the previous quarter.
A net 60% of construction companies are the least optimistic about business prospects against 29% of distributors, 27% of retailers and 14% of manufacturers.
The business group said service companies are the least pessimistic, with a net 5% reporting reduced confidence levels.
In all ISME said 38% of companies anticipate a deterioration in business conditions over the next 12 months. A total of 30% expect business conditions to improve, up five percentage points on the previous survey.
Just over half of respondents (57%), are concerned that current business conditions threaten the viability of their business. The figure is an improvement on the 67% in the previous survey.
Employment losses continue in the SME sector, but at a slower pace. A net 21% of companies reduced employment, compared with a net 35% in the previous quarter, with the largest number of net job losses reported in construction.
“The export figures ‘provide a ray of light’, confirming that companies trading internationally are seeing a significant ‘bounce back’ in levels of trade, with companies reporting an increase in export values, the highest rate in over three years. This is an encouraging turnaround and indicates that future growth is going to emanate from this sector,” said Jim Curran, head of research at ISME.
The results confirm a general improvement in business trends.
“It is quite noticeable that there is a continuing divergence in performance between companies who operate in the domestic economy and those that trade internationally.”