The report looked at 421 smaller private companies across the UK. Companies in London and the South East are claiming the most positive economic picture. More than half (53%) in this region report they are in better financial health than before the financial crash. This is compared to a national figure of 28%.
Of these employers, 38% say they will be looking to hire new staff this year. Nearly a third (31%) are also planning to give pay rises to staff, the highest figure recorded since before the recession. The number considering pay cuts for employees has dropped to 12%. Despite the more positive financial picture in London, pay cuts are actually more likely, with 23% of companies saying they are planned.
Although the rise in planned pay increases is encouraging, PwC chief economist John Hawksworth said it could easily have been higher.
"Given the economic recovery, it is quite surprising that only 31% are planning pay rises, bearing in mind that average pay is rising across the economy, albeit only at around 1% per annum over the past year, but slowly picking up. It certainly suggests that it will be some time before you get strong pay rises across the SME sector," he said.
The report also suggested that CEOs of SMEs view new product and services innovation as the main routes to growth this year, with 48% citing it as their primary focus. This is the highest figure on innovation since the report began.
PwC partner Mike Greig said this is a sign that employers are cautiously starting to look to the future.
"Companies are looking forward but there are some big issues and obstacles to overcome in the coming years," he said. "Chief among these is the need to change the way they do business by adopting the right digital tools to provide growth opportunities and, at the same time, protect margins and revenues."
