The survey, released yesterday by the Business Banking Council, also showed that a quarter of the companies interviewed added employees, and that half have recovered completely from the effects of Sept. 11.

"There is a renewed strength in the economy," said Barbara Ankersmit, president of Qmark Research and Polling, which surveyed 400 companies statewide from Jan. 6-16 for the banking council.

Specifically, 56 percent of the businesses surveyed said their revenue increased last year, and 19 percent said it decreased.

Paul deVille, president and chief executive officer of retailer Hilo Hattie, said company stores on the Mainland are not doing as well as than those here.

"Lucky we live Hawai'i," deVille said. "I believe that Hawai'i is enjoying better results than our Mainland colleagues are."

Larry Lanning, marketing director for ACE Hawaii Hardware, said the weakness in consumer confidence experienced in the aftermath of Sept. 11 is gone.

"We are seeing really strong confidence," he said. "I would say there is an exuberance, with people coming in and saying, 'I want to remodel my house. I want to paint this.' We think this is going to continue."

Bob Taylor, president and chief executive of jewelry manufacturer and retailer Maui Divers of Hawai'i, said per-capita spending by domestic visitors who make up about 90 percent of Maui Divers customers is at an all-time high.

At American Savings Bank, sponsor of the Business Banking Council, the optimism has shown up in more deposits, more borrowing and more credit and debit card transactions, according to Gabe Lee, the bank's senior vice president for commercial markets.

Lee said companies are borrowing more to invest in technology and other improvements because of the improved outlook.

Profit before taxes was up last year for 47 percent of companies surveyed, compared with 40 percent in the previous year. Pre-tax profit drops last year were reported by 17 percent of companies, compared with 30 percent in the prior year, the survey said.

Hiring on the rise

Hiring was up last year for 25 percent of respondents, compared with 17 percent in the previous year. Job cuts were made at 12 percent of firms last year, compared with 24 percent in 2002.

The research sampled a cross-section of Hawai'i companies, predominantly retailers, but also food service, construction, professional services, wholesale and tourism businesses.

Among retailers, which represented 35 percent of respondents, about half relied almost entirely on residents for sales, about a third served visitors and residents, and about 10 percent relied almost entirely on visitors.

Among all retailers, 51 percent said they had more customers last year, an increase from 40 percent in 2002, 20 percent in 2001 — when the terrorist attacks hurt business — and 38 percent in 2000. Increases in spending per customer were similar.

None of the retail respondents were "very pessimistic" about their industry outlook this year, and though 12 percent were "somewhat pessimistic," 84 percent were somewhat or very optimistic.

For all businesses, 53 percent expected improvement this year, compared with 29 percent last year; while 10 percent expected business to worsen, compared with 12 percent last year.

Businesses with fewer than 10 employees generally were less optimistic than larger businesses, with 46 percent of the smallest businesses expecting improvement this year, compared with 72 percent to 77 percent for larger companies.

Not worried about taxes

Companies also were asked about the perceived effects of proposed tax increases being considered by the Legislature.

Eighty-six percent of respondents perceived minimal or no impact from a 1 percent increase in the general excise tax to help finance mass transit, compared with 13 percent that said it would have substantial impact.

Businesses surveyed weren't much more concerned about a proposal to allow counties to charge a 1 percent sales tax on tangible personal goods, with 78 percent saying it would have minimal or no impact, compared with 20 percent that said it would have substantial impact.

Carol Pregill, executive director of the Retail Merchants of Hawai'i trade association, said costs to account for the proposed taxes would not be insignificant, and she called business perceptions to the contrary "scary."

Katsumi Tanaka, owner of transportation company E Noa Corp., said he also was in shock that other companies view higher taxes as having little effect on business. He said it would hurt optimism if implemented.

The confidence level of the survey is 95 percent, meaning that results should not vary by more than 5 percent if the survey were repeated.