Posted on: Thursday, August 7, 2003
Businesses see promise ahead
| • | Hawai'i economic outlook: Looking better |
By Sean Hao
Advertiser Staff Writer
Optimism at Hawai'i firms is at its highest level since the first quarter of 2001, according to a survey of local businesses released yesterday.
The index of general business outlook sponsored by the Business Banking Council reached 128 in the second quarter, up from 121 in the first quarter and equal to a pre-Sept. 11 peak reached in the first quarter of 2001.
The survey showed that 38 percent of businesses feel the economy will improve in the next year — the second-highest total since the group started conducting the twice-a-year survey in 1998. The high of 39 percent was reached in the second quarter of 2000.
"As long as interest rates don't skyrocket or we don't go to war, everything looks positive," said Russell Young, president of contractor Albert C. Kobayashi Inc.
The survey of 459 businesses was sponsored by American Savings Bank and conducted by QMark Research & Polling. It has a margin of error of plus or minus 4.9 percentage points. The numbers aren't fully comparable because different businesses are surveyed each year.
Results from a separate survey targeting the construction industry showed similar levels of optimism.
Fifty-two percent of the local businesses that either work in the building industry or derive most of their sales from building expect revenues to grow in the next year or two. That's comparable with 51 percent of businesses with similar sentiments in 2001.
The results appear to indicate that the booming construction industry, which is helping to hold up the economy, continues to show near-term strength. Residential and commercial construction have benefitted from historically low interest rates.
Forty-nine percent of all businesses responding said they have had an increase in gross revenue.
Half of building industry respondents said revenues rose in the last year, compared with 38 percent in 2001.
On a note of caution, 42 percent of businesses surveyed reported having less disposable income, which was up sharply from 26 percent of businesses in the first quarter of this year.
When the economy is rebounding, it's not unusual for businesses to divert income to expenses that were delayed when times were hard, said Barbara Ankersmit, president for QMark Research.
"In January, we were just about back to where we were before" Sept. 11, Ankersmit said. "Disposable income hasn't caught up yet."
Businesses need to have a longer time when things go well before that changes, he said.
The bulk of the interviews for the second quarter survey were conducted between July 3 and July 16, before a recent rise in long-term interest rates.
Just how high interest rates would have to rise to curtail construction is unclear, said Riley Mende, vice president and manager of corporate banking for American Savings Bank.
"I think there's some room for it to go up, but I don't think the current rate will be a dampener at all," he said. "If the confidence level is low and rates go up anywhere near to 10 percent, you have a very big problem."
