The survey of more than 500 SME business leaders reveals 34% increased their headcount in the three months leading up to July. Only 9% said it has decreased.
This is driven by optimism about the wider economy. Almost one-third (31%) of SME employers feel more confident about their business' economic position, while only 11% are less optimistic than three months previously.
The manufacturing SME sector was particularly strong in the second quarter of 2014. This was largely driven by a rise in domestic orders. More than one-third (36%) saw domestic sales grow, while only 19% suffered a decrease.
The export picture is less encouraging. One-fifth (20%) of small businesses have seen these fall and only 18% increased their orders to foreign countries.
CBI deputy director-general Katja Hall suggested the sluggish exports could be down to the "strength of the sterling".
"Smaller manufacturers are settling into a regular growth pattern, with their order books and output growing for the fourth consecutive quarter," she said.
"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."