Small business confidence rose to its highest level in a year in the first quarter with more firms planning to ramp up hiring as the economy's prospects improved, a survey showed on Tuesday.

Vistage International said its confidence index rose to 105.1 in the first three months of 2012 from 98.8 in the final months of 2011.

It was the highest level since the first quarter of 2011.

The index was compiled from a survey in March of more than 1,850 small business chief executives.

Hiring plans reached a five-year peak with 57 percent of firms planning to increase jobs, up from 55 percent in the previous quarter. Even so, 84 percent of executives said they've learned to do more with less.

"While CEOs plan to increase hiring, they have adapted their companies to be productive with fewer employees and do not expect employment to return to pre-recession levels anytime soon," Rafael Pastor, chief executive of Vistage, said in a statement.

Sixty percent said the economy improved from a year ago, up from 41 percent in the fourth quarter of 2011, and the majority said the economy is in a durable recovery. Just 5 percent thought the economy had worsened.

Executives were also more cheery on the outlook for the economy with 49 percent expecting it to fare better this year, up from 40 percent.

The economic optimism lifted investment plans with 45 percent of firms planning investments in new plants and equipment, up from 42 percent in the previous quarter.

More small businesses expected to see higher profits with 60 percent expecting improved profitability, though it was still well below the peak of 74 percent seen in late 2003.