Small and medium-sized businesses expect further improvements in trading conditions over the coming year, according to the latest quarterly business trends survey by the Irish Small and Medium Enterprises Association.

The survey of more than 1,100 businesses showed positive trends in 11 of its 12 key indicators, including an 18 point rise in business confidence and a 12 point increase in expectations.

Profitability expectations were positive for the first time since the beginning of the recession, with 14 per cent of businesses expecting to become more profitable over the next 12 months.

The only area which showed negativity was current exports, but this was balanced by the 63 per cent of businesses which expected higher exports over the next 12 months.

Indicators relating to employment were the most positive they have been since winter 2007, ISME said, with employment up 6 per cent. Some 15 per cent of employers expect to hire more workers in the next 12 months.

ISME chief executive Mark Fielding called on the Government not to "stifle the positive sentiment" in the SME sector when introducing the budget on Tuesday.

“While the majority of SMEs continue to battle out of recession, the mindset is positive and cautiously expansionary. The main focus must remain on cost curtailment and any government budgetary intervention must not interfere with the gradual turnaround.”