New research from ISME, the representative body for small and medium business, shows that its members are bullish about the prospects for 2005, with 30 per cent of companies more confident about business prospects than they were 12 months ago.
ISME's Fourth Quarter Business Trends Survey found that 41 per cent of companies surveyed plan to increase employment in the coming year, with just 8 per cent planning to reduce numbers.
The manufacturing sector in particular has shown a significant recovery, with one fifth of companies anticipating future job creation.
Based on the data, and in the absence of any major shocks, ISME believes the SME sector will create 25,000 jobs in 2005.
Small firms will also increase investment next year, with 51% of companies saying investment levels will rise compared to 2004.
On the downside, almost one-fifth (19.3%) of respondents revealed that their sales/order books were below normal for the time of year. Other areas of concern include the length of time it takes to get paid and the reduction in value of exports.
"While the association is anticipating solid growth in the SME sector over the next 12 months, the combined threats of a continuing weakening dollar and high oil prices in the immediate future could have negative consequences for our inflation rate and competitiveness," said ISME Chief Executive Mr mark Fielding.
"Either of these threats have the serious potential to negatively distort future economic growth, further undermine the value of exports and need to be provided for and factored in accordingly."