Posted on: Friday, March 18, 2005

Survey finds businesses high on economy

By Sean Hao
Advertiser Staff Writer

Confidence among local businesses in Hawai'i's booming economy remains at record highs, according to a survey released yesterday by Bank of Hawaii.

The Bank of Hawaii Business Confidence Survey showed 58.8 percent of respondents are expecting somewhat or much higher performance for the state's economy during the next year, with just 6.3 percent expecting lower performance.

Fully 34.8 percent of businesses surveyed expected the state's economic performance to remain the same. The February survey included 351 responses and had a margin of error of plus or minus 5.2 percent. The results were comparable with the bank's prior two biannual surveys and confidence levels experienced at the peak of Hawai'i's most recent economic boom in 1989.

"The last time we observed these confidence levels was in 1989 and then only briefly at the peak," said Paul Brewbaker, the bank's chief economist. "We have entered that zone, and we seem to be staying there.

"Firms' expectations about their own sales, their industries' outlook and the overall Hawai'i economy have all converged at high levels."

The state's economy is benefiting from accelerating construction and stronger tourism that has helped to boost employment while slicing the jobless rate to about 3 percent.

Overall the survey suggests optimism in terms of business investment and profits. At the same time, businesses were more reserved about the prospects for hiring additional workers. The survey showed 28.1 percent of respondents forecasting adding jobs during the next year while 10.4 percent expected lower employment levels. About 61.4 percent of businesses expected employment to remain the same.

"In general, businesses tend to operate differently from 10 to 15 years ago, with a tendency toward smaller staffs and cautiously optimistic expectations about the future," Brewbaker said. "This restrained enthusiasm may explain firms' muted plans for hiring."

Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.