Overall confidence increased to a five-month high of 28%, Lloyds Bank business barometer found.
The outlook for businesses’ own prospects is at a healthy 48% – and the highest level since April – more than half expect a rise in activity over the next year.
And optimism over the UK economy has also increased by around four percentage points – but at just 8% is still well below the pre-Brexit vote average of 39%.
The biggest companies are typically most concerned about Britain’s departure from the European Union, the research showed.
Lower recruitment expected
Firms operating in the consumer and business services saw an overall increase in business optimism, while confidence dropped among companies in the industrial sector.
Hiring intentions have softened in recent months and now sit at 23%, the lowest level since May.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Despite a slight increase in overall business confidence, firms continue to remain concerned about the outlook for the economy.
“The results point to the economy continuing to expand in Q4 at a similar pace to recent quarters.
“However, larger companies reported weakest business prospects as well as biggest concerns about the impact of Brexit.”