Firms are showing growing signs of confidence in early 2014, according to the latest SME Trends Survey.
The survey of 335 firms from the Confederation of British Industry (CBI) shows that small manufacturers are planning to spend on expansion over the coming year.Optimism levels are still rising, thanks to higher order volumes over the last three months of 2013.
The Trends Survey found that a third of firms (34%) were more positive following higher order volumes at the end of last year.
This is reflected in firms’ intentions to invest for the future and improve their capacity.
As many as one in seven firms is planning to invest in capital and machinery, while one in seven are also prepared to spend on commercial property – the highest number since records began back in 1988.
Stephen Gifford, the Director of Economics at the CBI, said it was encouraging to see firms willing to make capital investment in machinery and buildings.
"As the recovery takes hold, the investment cycle is starting to turn," he said.
"Orders and output continued to grow at a healthy pace, although not as fast as predicted.
"However, firms remain optimistic about prospects, with growth in orders and production expected to accelerate."