Hawaii businesses small and large are experiencing the worst decline in gross revenue and profits in more than a decade, according to a survey released today.

More than half — 54 percent — of 402 companies surveyed said they had a decrease in gross revenue over the past year, according to the Business Banking Council's 23rd Hawaii Economic Indicator Study. Also, more than half — 55 percent — said profit before taxes has gone down.

These are the worst levels seen since the council launched the study in 1998.

Medium-size businesses with 50 to 99 employees were hit the hardest, with 60 percent reporting a decline in gross revenue and 68 percent a drop in profits before taxes.

More than a third of businesses reported having to reduce staff compared with a year ago.

The Performance Index, which measures changes in gross revenue, profits and employment, came in at 92 among general businesses, the lowest number in the study's history.

The Optimism Index, which measures economic outlook, has remained low since the second quarter of last year and came in at 80.

The majority of businesses surveyed — 61 percent — believe the economy will get worse in the coming year. Only 6 percent believe the economy will improve next year.

For Jean Santos, senior consultant at Business Consulting Resources, which conducts the biannual study, the lack of optimism is most disconcerting.

“;In challenging economic times, innovation, optimism, creativity and redefining your niche in the market is vital,”; said Santos. “;When optimism gets to such low levels, we tend to be our own worst enemy, and we get dragged down even more when we don't have optimism pushing us to innovate.”;

While many respondents in the past cited the cost of doing business in Hawaii as the main cause of economic challenges, 35 percent this year blamed it on the national mortgage and financial crisis, while 22 percent faulted waning consumer confidence. Eleven percent blamed it on the cost of doing business.

For retailers, the outlook wasn't much better. Pessimism among retailers is at its highest point since 2003.

Nearly half, or 44 percent, said they were somewhat pessimistic, while 6 percent said they were very pessimistic about their industry's prospects over the next year.

More than a third reported a decline in their customer base, while 46 percent reported a decrease in average customer expenditures compared with a year ago. Fifty-four percent recorded lower sales during the 2008 holiday season compared with a year ago.

The survey, conducted by QMark Research from Jan. 8-22, has a margin of error of 4.9 percentage points.