Hawai'i companies losing confidence
By Susan Hooper
Advertiser Staff Writer
The business community's confidence in Hawai'i's economy has slipped from a year ago, a survey from the Bank of Hawaii shows.
Among the businesses surveyed last month, more than 65 percent said they expect prospects for activity in the economy to be the same or better in the next 12 months, while more than 34 percent said they expect those prospects to be lower.
In the bank's July 2000 survey, 89.3 percent of those surveyed said they expected prospects for statewide economic activity to be the same or better in the year to come, while 10.7 percent said they expected economic activity to be at a lower level.
The business community's diminished expectations square with recent figures that show the local economy cooling somewhat this year as Japan and the Mainland's economies continue to struggle.
In tourism, the state's largest industry, the visitor rate slipped 1.5 percent in the first half of the year compared with robust arrivals in the first half of 2000, state researchers have said. And Honolulu's inflation rate rose a scant 0.8 percent from January to June, the federal Labor Department said last week. Such a slim rise in prices can be a sign of weak consumer demand.
The bank mailed its survey of business confidence to about 3,500 firms statewide in both years. About 380 businesses participated in this year's survey, which has a margin of error of plus or minus 5.0 percentage points.
About 450 businesses took part in the 2000 survey, which had a margin of error of plus or minus 4.6 percentage points.
Paul Brewbaker, the bank's vice president and chief economist, said businesses in the survey tend to be more pessimistic about the economy than they are about their own firms or their industry.
Of those firms surveyed this year, 70.9 percent said they expected their firm's profits will either remain the same or rise in the next year, while 29.1 percent said they thought their profits would be lower.
In last year's survey, 81.2 percent of firms surveyed forecast similar or higher profits, while 18.8 percent said profits would be lower in the next year.
Business confidence in Hawai'i this year "is still higher than at any time during the 1990s stagnation," Brewbaker said.
The bank is forecasting 3 percent growth in the gross state product this year, he said, which compares with actual growth last year of 3 percent.
Asked how the results of the current survey square with his 2001 economic forecast, Brewbaker said, "Everybody seems to have the impression that our forecasts are too high. (But) I'm thinking that we who professionally forecast tend to be closer than I think is generally recognized, which is not to brag, but which is to reinforce the idea that there's a tendency (in the business community) to be a little more pessimistic than the reality tends to bear out."
Reach Susan Hooper at shooper@honoluluadvertiser.com or 525-8064.
