Small businesses continued to shed jobs in the second quarter of this year, in spite of a slight overall recovery, according to new figures.
A survey by the independent Small Business Research Trust shows that since the first quarter of 2006 investment has picked up and slightly more firms report increasing rather then decreasing sales.
But while the employ-ment situation has margin-ally improved, three per cent more firms report they are cutting back on jobs rather than increasing employment.
Last year, in three of the quarters, a majority of firms reported that they had cut rather than created jobs.
Only in the second quarter was there a small positive difference in recruit-ment over job losses.
Mark Beresford-Smith, chief economist for HSBC Bank, said: "It is quite likely that smaller firms have had a harder time than their larger counterparts during recent months.
"But it is also clear that the economy's overall growth rate has been boosted to a significant extent by a build-up of inventories by manufacturers and distributors.
"These unsold goods are, obviously, not reflected in business turnover.
"In fact, during the first quarter spending by households, which is a key driver of demand for many smaller firms, rose in real terms by just 0.3 per cent."
The SBRT survey, carried out by the University of Liverpool, finds that UK small businesses are optimistic about prospects in the next quarter for investment, sales and employment.
Optimism is particularly strong regarding sales, with nearly 40 per cent of firms expecting sales growth compared with 20 per cent believing they will decline.
However, Brian Wolfe, SBRT chairman, warned that bullish expectations are likely to be disappointed.
"While our Q2 survey indicates that small businesses have been 'holding up' over the past six months, this 'feel good' factor may rapidly change against a background of increasing energy costs together with inflationary pressures that have now forced the Bank of England to increase interest rates," he said.
"Small businesses would have difficulty in recovering these additional costs by increasing prices. This would cause a slowdown in the business performance of UK small firms."
The surveys also show micro business - fewer than ten employees - have over the past year and three quarters performed particularly badly when it comes to creating jobs.
Since the end of 2004, more micro businesses have recorded job losses rather than increases in every quarter, SBRT said.