A NEW SURVEY has shown that small firms have gained confidence in the current business environment in the third quarter of 2010.

The data published by the Small Firms Association showed that the number of firms describing the business environment as ‘poor’ or ‘very poor’ fell by 9% since the second quarter – though the figure remained at 50%. That figure is also down 17% on the same point last year.

By comparison, 19% of respondent firms said the business environment was ‘good’ or ‘very good’ – a relatively small proportion, though one that has grown by 6% from April to June. At the same time last year, just 7% of firms gave similar responses.

Further, 29% of firms said they anticipated that the environment would be ‘very good’ or ‘good’ in three months’ time.

Elsewhere, 31% of firms rated their own businesses as either ‘good’ or ‘very good’, an increase of 5%, while the segment rating themselves as ‘poor’ or ‘very poor’ fell by 8% to 33%.

This time last year, the number of firms with pessimistic outlooks for themselves was as high as 53%.

On a sectoral breakdown, manufacturing companies were the most optimistic about their own futures, with 37% of those giving upbeat responses, compared to 33% in the services sector and 21% in distribution.

Commenting on the results, the SFA’s acting director Avine McNally said the figures were welcome, but indicated that the government still needed to provide clarity about the impact of the forthcoming Budget on small firms.

Access to credit was an ongoing challenge, it said, with 21% of firms saying the cost of working capital had increased in the last three months, while 18% of firms said the availability of capital had dropped in the same period.