Survey: Hawaii
businesses hopeful

Their optimism comes
despite declines in profits

By Jerry Tune
Star-Bulletin

Their business is mostly down or flat. The majority say their income is lower. Many have cut their work force.

But Hawaii business executives are still more optimistic than they were six months ago, according to a survey of 409 local businesses. The February survey by the Business Banking Council found that 57 percent of respondents believe Hawaii's economy, which has been slumping for nearly a decade, would start improving within two years or less.

"We see the beginning of a feeling of more optimism," said Barbara Anker-smit, president of QMark Research & Polling, the division of Starr Seigle McCombs Inc. that conducted the survey from Feb. 2-9.

American Savings Bank sponsors the Business Banking Council, a group of local businesses from various industries that was created in 1995 to assist the business and banking community in providing products and services that foster economic growth.

The survey, the third since July, found that businesses were about 15 percent more optimistic than six months ago even though their business was down about 2 percent. Using July's results as a basis of 100, the survey's "optimism factor" index -- measuring responses on questions regarding businesses' outlook -- rose to 115. But the "performance factor" index -- measuring responses on questions about employment, gross revenue and profits -- fell to 98, the council said.

Several council members yesterday said the increased optimism might be just a seasonal response when new products are coming out, the big sports events are helping tourism, and the state legislative session is starting.

Robert Hamilton, a principal at Aetna Life Insurance & Annuities Co., stressed that small businesses are "still in dire straits."

"Large and medium-sized businesses have started to grow but 85 percent of small businesses lost employees last year," Hamilton said. He said 55 percent of small businesses reported a decrease in gross revenues, and when looking at profits, small business had the smallest gains and the largest decreases.

Hamilton said it was significant that 20 percent of the businesses would use disposable income to pay down debts. He said that is a "defensive strategy" as they "hunker down and hang on for a few more years."

Joyce Edwards, executive vice president at The Systems Center, said that she works with small business and "70 to 80 percent are either at a standstill or going down."

The survey's summary shows:

Problems: Government red tape, the pyramiding of the state's general excise tax and the cost of worker's compensation insurance head the list.

Employment changes: 13 percent say they have increased their number of employees in the last year, 53 percent say staffing levels are unchanged while 34 percent say their number of employees has declined.

Gross revenue: 31 percent say they've experienced an increase in revenues during the past year, 19 percent say they have remained the same while 49 percent say revenues have gone down.

Profit before taxes: 26 percent say profits are up from the previous year, 20 percent say profits have remained flat while 52 percent say profits have declined.

Disposable income: 20 percent say they have more disposable income this year than last year, 28 percent said income is unchanged and 51 percent say they have less income.

Economic outlook: 27 percent feel the economy is improving, 44 percent say things will remain the same, and 28 percent think things are getting worse. Fifty-seven percent feel that growth will occur within two years, while 34 percent expect a turnaround to take five years and 8 percent don't see the economy ever getting better.

The survey's margin of error was plus or minus 5 percent.