Small and medium finance and insurance firms recorded the strongest profitability in the last quarter, according to new research by Telstra subsidiary Sensis.

Firms in those sectors reported the highest net performance in sales and profitability, according to a new Sensis survey measuring business confidence and behaviour among Australian SMEs.

Finance and insurance firms have topped the profitability index for two successive quarters.

Among other measures, the building and construction sector reported the highest confidence while hospitality recorded the strongest levels of employment.

The survey of 1800 Australian firms found business confidence among SMEs has increased for the third successive quarter, with faith in the economy at its highest level in two years.

“We’re seeing signs of sales increasing and being positive for the first time since February 2008 and it’s welcome news for many of our small and medium businesses around Australia,” report author Christena Singh said.

Principal concerns for SMEs include work and sales volume, cash flow and the economic climate, although 37% of respondents say they are facing no major problems.

Expectations for the year ahead were varied, with increases expected for sales, wages and profitability and falls expected in employment, prices and capital expenditure.