Small businesses are recruiting at the fastest pace in 16 years, a new study reveals.

The latest CBI SME Trends Survey of 500+ SME business leaders has found that 34% hired more staff in the three months to July ‒ the fastest upturn since 1998 ‒ and just 9% cut headcounts.

Nearly one-third of the respondents (31%) said they were more optimistic about their business’s economic prospects than they were three months previously; only 11% said they were less confident.

SMEs in the manufacturing sector put in an especially strong recruitment performance during Q2, largely as a result of accelerating domestic orders. 36% reported that their businesses had seen increased domestic sales, although 19% saw a decrease.

The export story is rather more disappointing, however: 20% of SMEs reported a fall in export sales, while just 18% seeing a rise in orders from foreign countries. CBI deputy director-general Katja Hall attributed these figures to the relative strength of sterling, adding: “Smaller manufacturers are settling into a regular growth pattern, with their order books and output growing for the fourth consecutive quarter. We need the government to get behind our small- and medium-sized manufacturers to help them sell their products and services to new markets around the world, giving a sustainable boost to long-term growth.”

The recruitment drive amongst SMEs is good news for at least some sectors of the UK’s professional contracting community, as SMEs are more inclined to hire skilled Umbrella Company Employees and other freelances to complete IT or business-critical projects when they lack the resources in house.

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