Some 38 per cent of small businesses are positive about their prospects for 2007, predicting increases in employment and investment, according to a new survey.
Business body Isme today published its quarterly business trends survey, which found a third of SMEs expect job creation over the next 12 months.
However, the body says there will be no net new jobs in the manufacturing sector.
Isme said costs, particularly wages and energy, continue to be the number one concern for its members.
Increases in the minimum wage, energy, electricity and local charges will negatively affect on results next year, the 500 companies surveyed said.
Some 56 per cent of companies plan to increase investment in the next 12 months, up from 53 per cent in the corresponding period last year.
Just 6 per cent anticipate reduced investment levels.
Slightly over two thirds (67 per cent) of companies reported an increase in turnover, up from 64 per cent in the previous quarter. Some 22 per cent of respondents have sales/order books below normal for this time of year. This can be partly attributed to cancellation of orders, which was experienced by 13 per cent of companies.
Isme said the cancellation figures "again point to the increasingly worrying trend where local indigenous companies are battling against the rise in business costs and their inability to increase prices, due to stiff competition from cheap imports".
When asked to identify issues which are their immediate biggest concern, 22 per cent of firms identified labour costs, 16 per cent cited erosion of competitiveness and 11 per cent said energy costs were of most concern.