Rising business and consumer sentiment have not translated into actual conditions on the ground, a leading business group says.

The Australian Chamber of Commerce and Industry, backed by the results of its latest small business survey, believes the economy remains contractionary and suggestions the worst is over is “jumping the gun”.

The June quarter survey revealed things were on the up for small business although the level of their expectation of economic performance – 36.9 – was well below the 50-point mark which indicates recovery would happen within a year.

Sales revenues, profits and investments all enjoyed modest rises but employment and wages growth both dropped, the survey found.

“It shows a slight improvement in general economic conditions but generally things are very weak,” the chamber’s acting chief executive Greg Evans told reporters on Tuesday.

Business confidence and consumer sentiment had improved during recent weeks, he said.

“However we’re yet to see that truly translate into … actual small business conditions on the ground.”

Commentators who believed Australia was through the worst of the economic slowdown had “jumped the gun”.

“The recovery stories in some quarters may have been oversold … we remain very cautious.

Mr Evans said it was much too early for the Reserve Bank to be considering interest rate rises and warned businesses might suffer a relapse as a result.

“(Interest rate rises are) something very much in the future, certainly something that’s not in this calender year and probably towards the middle of next year,” he said.

The survey considered answers from 1,421 respondents.