Small businesses hiring for first time since 2010 as confidence picks up

Small businesses had a quarter of "optimism, growth and confidence", according to the latest snapshot, and are creating jobs for the first time in at least three years.

The Federation of Small Businesses (FSB) said its confidence index rose to 33.5 in the third quarter, double the score in June and representing the third successive quarter of growth.

For the first time since the report began in 2010, more firms are looking to take on staff than reduce their workforce, while the number of firms intending to increase investment in the next 12 months rose to 21%.

Financial and business services, as well as technology firms, reported the highest levels of confidence, although those in the leisure and entertainment sectors were less optimistic as household spending power remains squeezed.

FSB chairman John Allan said: "Optimism, growth and confidence can be used to summarise this quarter's findings. Small firms are clearly helping the economy gain momentum compared to the same point last year."

Optimism picked up in nearly all regions, but London's score of 46% contrasts with much lower levels in northern regions and a decrease in the North East.

FSB members reported that inflationary pressures have eased as just over 60% said that the cost of doing business had increased in the quarter, below the peak in late 2011 of 75% and below the last three quarters.

Firms are also seeing cheaper finance but the FSB said there has been little year-on-year movement in the percentage of companies applying for credit.

The FSB, which has around 200,000 members, said some 2,330 firms participated in the latest survey.

Mr Allan added: "This is the most positive report that the FSB has published for some time and gives further confidence to policymakers and the Government that steady growth is back on the agenda.

"This now needs to be fostered and the Autumn Statement later this year should be the ideal vehicle to do this."

A Treasury spokeswoman said the survey offered more evidence that the economy is turning a corner.

She added: "The challenges that many small businesses still face demonstrate why there can be no let up in delivering the Government's economic plan."