LANSING ? Despite tough economic times in Michigan, the latest Small Business Barometer survey finds that small business owners are more upbeat about the Michigan marketplace than they were six months ago. There?s even a slight up tick in the number of employers who say they hired more workers over the past half year.

Small business owners say there are still plenty of problems that need to be addressed: Decreasing sales and profits, poor access to credit, a lousy business climate and a continuing slide in perceptions of the fairness of the tax system.

The Barometer also flashes a warning sign to state legislators: only 6 percent of respondents give a positive rating to the performance of the Legislature.

Survey participants were asked if the number of employees on staff has increased, decreased, or remained stable over the last quarter. Employment appears to be inching slowly towards the historical average hiring level and becoming relatively more positive for small businesses in Michigan. Thirteen percent of those surveyed reported that they had hired more employees over the past quarter, a three percentage point increase over the past wave in January.

In a shift in the direction of the trend lines, positive ratings of the Michigan marketplace rose seven percentage points, reaching 40 percent. This is in line with levels from early 2007. Whether this signifies the beginning of a long-term turnaround is unknown. This indicator will be tracked closely over future waves to provide an answer.

Small businesses may be reevaluating their perceptions of the market, but their ratings of the Michigan?s business environment are rather unfavorable, indicating that they do not feel the environment is conducive to their business growth. Positive ratings fell to 6 percent this quarter, their lowest historical level for the Small Business Barometer. This compares with a peak of 75 percent less than a decade ago. Negative ratings rose to yet another record high ? 56 percent. This is more than three times the historical average of 17 percent and more than 10 times the levels seen for the second half of the 1990s.

Looking ahead to the next twelve months, expectations of business performance remain well below their historical averages. It appears that while Michigan?s small businesses are more optimistic than recent history might justify, their outlook for the future is considerably less positive overall than at any time in the past 15 years.

Perceptions of the tax system continue to be unfavorable. Only 8 percent of respondents rated the fairness of the tax system positively. Since 1994, positive ratings had mostly stayed above 10 percent. However, the past few waves indicate a more downward shift. In the last wave, negative ratings had risen to their highest level (46 percent). This wave marks a marginal fall to 44 percent, which is still well above the historical average of 26 percent.

Along those same lines, when small business owners were asked to identify ?the most negative aspects of doing business in Michigan?, taxes were by far the single most frequently cited negative factor. Clearly, the shift to the new Michigan Business Tax and its 22 percent surcharge is not perceived positively by the small business community surveyed.

This report summarizes the results of the most recent Small Business Barometer. Small business owners were surveyed in May 2008.

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