State survey reflects business downturn

By Frank Cho
Advertiser Staff Writer

A survey of more than 400 Hawai'i businesses shows nearly half of the companies now have lower profits and fewer revenues and employees than they did a year ago. And most predict the economy will remain the same or get worse in 2002.

The survey, released yesterday by the Business Banking Council, also showed that it was small companies of fewer than 50 workers that were the most pessimistic, with one out of four saying the economy will get worse.

The survey conducted by Qmark Research & Polling and sponsored by American Savings Bank, polled 402 businesses by phone from Jan. 10 to Jan. 15.

"There isn't a whole lot of confidence out there right now," said Beverly Marica, franchise owner of Adecco Personnel Services and Adecco Technical. "I think what is happening is the impact of the tourism industry downturn due to 9-11 has made everybody gun shy and skeptical. I think people are counting their pennies and tightening their belts."

Profits are down at 42 percent of the businesses surveyed and sales are lower at 46 percent, compared to only 28 percent that had declining sales at the same time last year.

However, the poll does not survey the same businesses each time, so year-on-year comparisons are not exact. The survey also has a margin of error of plus or minus 5 percentage points.

The survey also showed that:

• 38 percent expect the economy to improve this year.

• 46 percent of retailers report declines in customer base.

• 51 percent of retailers say customers are spending less than a year ago.

• 58 percent of all companies polled said the Sept. 11 attacks negatively affected business.

• On average, respondents saw a 23.5 percent decline in business because of Sept. 11.

Only 16 percent of business owners and managers said they expanded their payroll in the past year, down from 23 percent the previous year, according to the survey.

"I was not surprised. Business has been tough except for certain pockets," said Carol Pregill, executive director for The Retail Merchants of Hawaii.

The Business Banking Council's optimism index — which measures a business' general outlook for the economic future of the Islands — is holding at 114, down from 122 a year ago and at its lowest first-quarter level since the survey was started in 1998. A higher number for the index reflects greater optimism.

Reach Frank Cho at 525-8088, or at fcho@honoluluadvertiser.com.