Guess who's hiring again?

Marlin Steel's Drew Greenblatt is shown in Baltimore, Dec. 10, 2014.
Matt McClain | The Washington Post | Getty Images
Marlin Steel's Drew Greenblatt is shown in Baltimore, Dec. 10, 2014.

After more than five years of hunkering down, small businesses are back in a hiring mood as the U.S. economic recovery takes hold.

Last year, Marlin Steel booked its best revenues and profits since owner Drew Greenblatt bought the small Baltimore manufacturer in 1998. He's boosted his payroll by eight workers, to 30, from a low point in 2013.

Read MoreSmall business optimism hits 8-year high

This week, he signed a deal to increase floor space by more than 50 percent to keep up with new orders for wire baskets and other steel products from customers in the automotive, pharmaceutical and aerospace industries.

"That's a big increase for us," he said. "Now we can buy more robots and automation and hire more talent to run that equipment."

Jobs number misleading: Gallup CEO
Jobs number misleading: Gallup CEO   

That upbeat mood is reflected in surveys of small business and in hiring data. Last month, small business optimism jumped to its highest level in more than eight years, according to a monthly survey by the National Federation of Independent Business. Now back at prerecession levels, the index was boosted by a surge in sales expectations along with plans for capital spending and business expansion.

Small-business owners' improved outlook is also showing up in hiring statistics. Last year, companies with fewer than 500 workers expanded their payrolls by more than 2 million positions, according to data from payroll processor ADP. That's roughly two-thirds of the 3 million total new hires—the best year since 1999—tracked by a separate data series collected by the government's Bureau of Labor Statistics.

While manufacturers like Marlin Steel are among those adding workers, the bulk of the hiring is coming from services businesses, where small businesses account for roughly three out of four net new hires, according to ADP data.

The surge in small-business hiring comes after one of slowest recoveries from any post-war recession, one that had been weakened by the fading fortunes of 5.7 million U.S. small businesses with a combined payroll of more than $2 trillion a year.

During that period, the role of small business as a job creator fell sharply, especially among younger businesses that once created the bulk of employment. Over the past 20 years, companies with 500 or fewer employees created about two-thirds of net new employment. By last year, that share had fallen to half of all new jobs.

It remains to be seen whether the pickup reverses a long-term decline in the role of small business as the engine of job growth. Although growth accelerated in January, the pickup followed a downturn in the second half of 2014, according to a separate survey small business by another payroll processer, Paychex.

And, like much of the overall economic recovery, the pace of small business hiring has been uneven in different parts of the country. In January, Paychex tracked the strongest growth in Indiana; Atlanta ranked at the top of large metro areas.

As the recovery gains momentum, much of the rest of the developed world remains mired in stagnation, which has left small businesses struggling overseas. A slowdown in new company formation has contributed to that stalled growth, according to a study last year by the Organization for Economic Cooperation and Development.

Read MoreSmall-business slowdown holds back global recovery

In the 18 countries covered by the study, new and young companies (those less than 2 years old) still create 42 percent of new jobs, even though they account for just 17 percent of total employment. But that pace of job creation has fallen as start-ups make up a smaller share of all companies.

The churn of jobs—as they're destroyed by older companies and created by new ones—may be disruptive to the workers involved. But that churn—economists call it business dynamism—is essential to the long-term health of a growing economy.

Turnover has picked up in the U.S.—another sign of a strengthening of the jobs market. In a separate report, the Labor Department said the level of job openings stood at around 5 million in November, the highest level since January 2001.

For employers like Greenblatt, who is investing in advanced manufacturing technologies, some of those skilled new positions are getting harder to fill. He said that's one reason he's raised wages and is investing in training new hires.

"There's a serious skills shortage," he said. "Talented works out there with those capabilities very few and far between .And it's a big problem for American manufacturers."