Businesses confidence has hit its highest level in 11 years, as the services sector and retailers become more optimistic about their sales outlook.

Forty six per cent of businesses expect higher sales in the December quarter, while only nine per cent are predicting a fall, the latest Dun and Bradstreet’s Business Expectations survey shows.

The services sector was the most optimistic about sales in the fourth quarter of the year, followed by the transportation, utilities and construction sector.

Retailers also expect a recovery from the recent slump in sales.

Dun and Bradstreet chief executive Gareth Jones said there has been a steady improvement in business confidence since the end of 2013.

“While there has been a recent pullback in the profits and capital investment indices, there’s a clear upward trend developing this year and all of the surveys measures are above their 2013 level,” he said.

“The sales outlook is particularly solid through to the end of the year, providing encouragement for those businesses concerned that the federal budget had knocked the wind out of consumer confidence and spending.”

Dun & Bradstreet economic adviser Stephen Koukoulas said the surge in business confidence should boost economic growth later in the year.

“The continued resilience in the outlook for employment suggests that the pace of job creation will move to a point where the unemployment rate edges lower over the next couple of quarters,” he said.

“The dip in expected selling prices indicates that the inflation rate probably peaked in the June quarter and will ease to the middle of the Reserve Bank of Australia’s two to three per cent target band.”

The report said that two out of three business are more optimistic about increased economic growth in the months ahead, but some parts of the country aren’t so upbeat.

When asked to rate local business conditions, Tasmanian business were the most pessimistic, with 39 per cent saying `very bad’ and only eight per cent saying `very good’.

In Western Australia, more than half of businesses described conditions as `average’.

The survey comes a day after the Australian Chamber of Commerce and Industry’s latest business expectations study showed business confidence and hiring intentions were down for the June quarter.

ACCI found business expectations weakened after the release of the May budget after touching the highest level in four years earlier in the year.