(FORTUNE Small Business) – Owners of small businesses are starting to show real signs of economic optimism. From the fourth quarter of 2003 through this year's first quarter, small firms added more employees to the payroll, as well as shifting their labor pool from contract to permanent workers.

Employment grown +2.2%

Contractors -9.8%

SOURCE: SUREPAYROLL SCORECARD FOURTH QUARTER 2003 TO FIRST QUARTER 2004