Its monthly index gained three points in January to 65.7 on a scale of 0 to 100. An index above 50 means owners expecting their businesses to be stronger in the next year outnumber those expecting a weaker performance.
Small business owners in Alberta are again the most optimistic, with an index of 70.5, with Newfoundland and Labrador (69.3) and Saskatchewan (66.7) close behind.
The CFIB says Ontario, Nova Scotia, Manitoba, Quebec, New Brunswick and Prince Edward Island also saw a rise in small business confidence and only British Columbia firms saw a decline.
The survey also suggests full-time hiring plans have risen to a post-recession high, with 27 per cent of small businesses who took part in the CFIB survey saying they expect to hire more staff in the next few months.
Similarly, 44 per cent of business owners described their state of business to be in "good" shape — the highest score in the past four years according to the federation.
"After a lacklustre November and December, small business owners across Canada are starting to feel more optimistic about the future" said Ted Mallett, CFIB's chief economist and vice-president.
"While it's too soon to make any conclusions about 2013, the latest survey results are very encouraging."
"Optimism is generally well-balanced across Canada," added Mallett. "Overall, there's a lot of optimism in white-collar industries such as professional services, finance and the information sector, but manufacturing, retail and construction are not far behind."
The January findings are based on 1,005 responses from CFIB members to a controlled-access web survey. The results are considered accurate to plus or minus 3.1 per cent 19 times in 20.