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Isle economic
recovery gaining strength

More than one-third of
Hawaii businesses see a
brighter year, a survey says

Index up for seventh straight month

By Russ Lynch
Star-Bulletin

Optimism is running high among Hawaii's businesses, according to a new survey that shows 37 percent believe Hawaii's economy will improve this year and only 6 percent think things will get worse.

Another 55 percent feel things will remain the same. Barbara Ankersmit of QMark Polling & Research, which did the survey for the Business Banking Council, said those people at least don't expect the economy to deteriorate.

"I was particularly encouraged in listening to the interviews taking place" Jan. 5-10, Ankersmit said in an interview today as the survey results were revealed. She said she was struck by how many businesses said they had a good Christmas and were seeings things get better.

"I don't think this is anything to go turning cartwheels in the street over, but at least it's an indicator that businesses think things are improving," she said.

The study results were the most optimistic since the quarterly survey, paid for by American Savings Bank, was begun in the second quarter of 1998.

The worst-case group, the 6 percent who believe the economy will get worse, is small compared with the 40 percent who felt that way in the first survey two years ago.

Looking at the actual performance of the businesses surveyed, the study showed a number of positive changes.

For example, 39 percent of businesses interviewed in the latest survey said their gross revenues had increased, while 35 percent said they had dropped. A year ago, 31 percent said revenues were up and 49 percent said they had fallen.

"This represents a continued trend in the positive direction, as the number of firms experiencing a decrease in gross revenues continues to decline," said the council's report on the survey results.

Two years ago, 48 percent said their revenues had fallen.

In the 2000 survey, 37 percent said pre-tax profits were up and 33 percent indicated profits were lower. In the early-1999 survey, only 26 percent reported higher profits and 52 said their profits dropped.

In the 2000 survey, 21 percent said they had hired more people and 23 percent said their employee numbers were lower.

The early-1999 survey showed only 13 percent with higher employment and 34 percent with fewer jobs.

While the overall tone of the survey results was positive, businesses said there still are many changes they would like to see to improve the business climate.

Asked which pressing issues need to be addressed in the current session of the Legislature, 58 percent said the pyramiding of the general excise tax needs to be reduced, 42 percent said government regulations need to be simplified and made more consistent, 41 percent wanted legislation outlawing frivolous lawsuits and 41 percent called for meaningful reform of workers' compensation rules.

"While the survey results are presenting an optimistic picture, the real issue is what does the community need to do to sustain continued improvement, even in small steps," said Jan Berman, president of the Retail Merchants Association of Hawaii.

The research was done through telephone interviews with representatives of 409 companies.

The Business Banking Council, sponsored by American Savings Bank, was set up in November 1995 to improve relations between businesses and banks.

It developed into an information-sharing organization that meets once a quarter to discuss banking products and services that could help the business community, address economic issues and advise American Savings on ways it can help business customers. The council also is developing its own economic index.

Members are chosen to represent a cross-section of the business community, from small businesses to large.

The current president is marketing consultant Helene "Sam" Shenkus of Sam Shenkus Marketing.

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The state’s index
of leading indicators
is up for the seventh
consecutive month

By Russ Lynch
Star-Bulletin

Hawaii's economy should continue to grow at least through the first half of 2000, a new state government survey shows.

The state's leading economic indicator, designed to predict the general level of economic activity five to 10 months in advance, was up for the seventh month in a row.

Although the increase, calculated from October data, was smaller than recent rises, it was the fourth consecutive month in record territory, said Seiji Naya, director of the Department of Business, Economic Development & Tourism.

And Naya said the indication that the growth rate has slowed suggests that the economy is settling into sustainable growth rates.

The word "leading" in the name of the survey means it looks ahead. October was the latest month of data from which it could be calculated, DBEDT said.

Three of five indicators that have the most to do with the future of Hawaii's economy were up in October, the department said. The number of real estate transactions on Oahu was up, as were Oahu real estate prices. The third indicator to improve was first-time unemployment compensations claims, which were down, DBEDT said.

Those that had a negative effect on the index were drops in the value of permits for construction and slightly lower average work hours in retailing, hotels and construction.

All of the national indicators were up, DBEDT said. On the international side, the continuing strength of the Japanese yen helped push the indicators up, DBEDT said.