Two out of five firms in the UK will recruit more staff next year despite continuing worries over a shortage of skilled workers and the impact of Brexit, says a report.
Research by the CBI found that growth in permanent jobs will outstrip temporary recruitment for the fourth year in a row.
But the survey of over 350 firms in the UK revealed that uncertainty over the UK's future relationship with the European Union has shaken business confidence in the labour market.
Skills shortages were said to be the biggest threat to competitiveness,with over half of those polled concerned about future access to skilled migrant workers.
Josh Hardie, the CBI's deputy director general, said: "With record employment levels, more people than ever are now in work and the strengths of the UK labour market look set to yield positive results over the course of 2017.
"Businesses are 100% committed to making the best of Brexit. However, this year's survey does show a greater sense of concern about the UK's long-term attractiveness as a place to create jobs.
"Getting our industrial strategy right and understanding what the UK's future relationship with the EU will be, will help ensure that this worry does not negatively impact the future performance of the labour market.
"The Government should build on the positive moves it has already made to dispel uncertainty by drawing up plans for a smooth transition, giving firms both the time to adapt to new regulations and the confidence to invest beyond 2019."
Carmen Watson, chairman of employment group Pertemps, which helped with the annual employment trends survey, added: "2016 may have been a year of uncertainty for businesses but what we are seeing, looking ahead to 2017, is renewed optimism with employers continuing to invest in their workforces leading to jobs growth across the UK.
"However, skills gaps remain a concern for employers as having the right people with the right skills is crucial for any organisation's performance."
Almost a third of firms said they expected to create apprenticeships, while most reported positive employee relations.
Minister for Employment Damian Hinds said: "With around 750,000 vacancies available at any one time, the jobs market is in a position of strength. Our dedicated Jobcentre Plus work coaches stand ready to help people find their ideal job and help firms get the best quality candidates to grow their business."