Isle business confidence levels off
A bank survey shows executives are worried about energy costs and the tight labor market
More than half of Hawaii businesses are still confident about the state economy, but the architect of a semiannual banking survey said their optimism has leveled off due to higher energy costs and tight labor and housing markets.
Of 305 businesses the bank polled in February, 51.7 percent expected higher levels of overall economic activity over the next 12 months, according to the business confidence survey conducted by Bank of Hawaii Chief Economist Paul Brewbaker. But that confidence level was down from 56.2 percent during the last survey in August 2005 and from its peak of 60.6 percent in an August 2004 survey.
Despite the gradual decrease in optimism levels, Brewbaker said Hawaii's economy continues to outpace the mainland in many areas, including the lowest unemployment rate in the country at 2.4 percent.
"Current high levels of confidence are just below the all-time highs of the late 1980s but have persisted at these levels for much longer than during that previous experience," Brewbaker said.
The Bank of Hawaii results followed the same trend of a Business Banking Council survey released earlier this month, which showed that 43 percent of businesses polled believed the economic outlook would improve in the coming year. A year earlier, 54 percent of businesses expected the state economy to improve.
In the Bank of Hawaii survey, 50.7 percent of the respondents expected higher levels of activity within their own industries, down from 51.7 percent in the August 2005 survey.
About 29 percent of the businesses reported higher profits than expected a year ago while 27.5 percent had lower-than-expected profits. As for the upcoming 12 months, 48.8 percent expect higher profits during that period while 13.6 percent anticipate their profits to decline.
In other categories reflecting 12-month outlooks, 35.4 percent of businesses expect their capital expenditures to increase, 29.5 percent see their work force growing, 58.2 percent anticipate higher sales and 27.2 percent expect higher inventory.
The Bank of Hawaii survey was based on responses from a mail-out form sent to businesses randomly selected from an independent business database.
The survey results have a margin of error of plus or minus 5.6 percent.
ON THE WEB
Complete results are available at the bank's Web site, www.boh.com/econ.