While business confidence is down, however, eight out of ten indicators are up but economic uncertainty is still a concern including retail.
Employment indicators are at the highest since before the recession, however, ISME warned that any meaningful growth will require cost curtailment, particularly in relation to state-influenced business costs and wage demands.
Exports, both current and expected, also showed a substantial increase, continuing the general positive trend.
Current exports went from 18pc to 32pc and export expectations went from 46pc to 55pc.
Mark Fielding, ISME chief executive said: "SMEs are making progress at a slow pace and economic recovery is far from guaranteed at present.
"The recently released Exchequer figures certainly show improvements but, as a nation, we continue to borrow more than we generate on an annual basis. This is certainly a cause for caution and while CSO figures have been showing positive developments it is far too early for complacency."
He added that the government cannot rely on PR spin and cheerleading alone to generate a boost to the economy.
"Fiscal prudence must be the order of the day so that confidence is restored. Politicians will be tempted to make decisions based on re-election aspirations rather than economic best practice in the coming months," he added.