But the survey shows they still believe that profits will remain under pressure for some time to come.
The report charts the performance of more than 2,500 UK firms and their views on prospects for the coming year. It shows that firms are hopeful of an increase in sales and orders by the end of 2009 but indicates that, without the ability to raise prices, profits will continue to fall for many. In addition, the survey highlights that investment and recruitment plans are still being scaled back.
These signs of greater confidence amongst British firms are rooted on hopes for a boost in sales and orders by the end of the year. The survey's business confidence index, which tracks firms' expectations for sales orders and profits over the coming six months, has risen to a balance of -3%, from the record low of -32%, six months ago.
The balance of firms expecting an upturn in sales has risen to +1%, with 31% anticipating a rise and 30% braced for a fall. This compares to a balance of -28% in the survey six months ago, when only 20% expected a rise and 48% believed there would be a fall.
A similar picture emerges for orders. The overall balance of firms expecting an increase in the next six months has risen to +6% (27% expecting orders to climb and 21% expecting a fall). At the time of the last survey, by way of contrast, the order book balance was -25%, with only 17% hopeful of a rise and 42% resigned to a downturn.
Despite the fresh hopes for sales and orders, profits are likely to remain under real pressure for most firms. Although the balance of firms expecting rising profits has improved, from a low of -42% in the last survey, it is still firmly in negative territory at -16%. A fifth (21%) expect profits to climb, while almost two fifths (37%) believe they will tumble. Two fifths (39%) think profits will remain stable.
Business confidence improved in all sectors, with business and other services, wholesale distribution and manufacturing reporting confidence levels above the all-sector average.
John Maltby, managing director, Lloyds TSB Commercial said: "A major factor in the dramatic fall into recession has been plummeting business confidence - and restored confidence is the key to any recovery. So this evidence that firms are regaining faith in their business prospects is good news.
"But the survey indicates a levelling off in the downturn, rather than a return to strong growth. For the time being, profits will remain under pressure and investment will be on the backburner. And that means businesses will need support in order to ensure the momentum of any recovery.
"The somewhat more positive outlook, with growth projected in export markets, means that there are opportunities and we hope that British firms can seize the initiative.”
