Confidence increased among small and medium sized business owners in the first quarter of the year despite growing uncertainty about the toll the ongoing euro zone crisis will have on exports.

The quarterly Isme business trends survey found that, as a whole, firms had raised their business and profitability expectations in the three month period. There were positive results in nine of 12 areas surveyed, with current sales, current exports and future exports the areas of decline among the 972 respondents.

The survey found that confidence and expectations increased considerably for the second quarter in a row, with expectations now at 15 (up from -19 in the third quarter of last year) and confidence at 4 (up from -17 the third quarter of last year).

Readings above and below 0 suggest expectations of growth and contraction respectively among respondents.

The survey, conducted in the third week of March, found confidence was highest among exporters, at +22, and lowest among retailers at -13.

Isme said it would be important to see if the trend continued in the next survey as confidence and expectations had been zig-zagging since Q4 2009.

Profitability expectations increased among respondents but remain in negative territory at -9 (up from -11 in Q4 2012 and -20 in Q3 2012).

Respondents said they expected sales to rise for the third quarter in row, even though "current sales" fell marginally in the period, and that both current and future investment was expected rise.

Replies on current and future employment were at their most positive point since early 2008, Isme said, even though the current employment figure remained negative at -8 (up from -13 in the previous quarter).

"In the retail sector the employment expectation has shown an improvement for the first time in four years, while it is still expected that some jobs will be shed, the rate has dropped from -18 to -5," Isme said.

The reading for current exports declined sharply from a reading of 41 in the final quarter of last year to 22. Expectations for exports in future also declined (from a reading of 53 in Q4 2012 to 45).

"Exports have been the most positive sector over the last few years and the Association expects another relatively stable year for SME exporters in 2013. However weaker demand from the UK and Eurozone economies could take its toll on exporters and delay the expected spill-over to the domestic economy…The next quarter will assist in throwing some light on the prospects for 2013/14," Isme said.