Economic expectations improved with 19 per cent of small- and medium-sized enterprises (SMEs) expecting Australia's economy to be better in a year.
The index found 49 per cent of SMEs believed the economy was currently growing, down seven percentage points from the previous quarter.
Despite the fall, the result is the second highest level in the history of the index.
Employment in SMEs grew to their strongest levels in the January quarter since the introduction of the Goods and Services Tax (GST), a business index found.
The Sensis Business Index for Small and Medium Enterprises showed that SMEs increased the size of their workforce by five per cent during the quarter, after three quarters of flat results.The figure was the strongest result since the GST was introduced in July 2000. It appears solid capital expenditure investment over the past year has finally translated into requirements for additional labour.