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The Honolulu Advertiser
Posted on: Friday, March 10, 2006

Survey finds less optimism in Isles

By Andrew Gomes
Advertiser Staff Writer

Fewer Hawai'i businesses expect the state economy will improve this year, according to a new survey that suggests most companies perceive economic growth is leveling off after peaking last year.

The survey of 454 companies across a broad range of sizes and industries found that 43 percent were optimistic that the economy will improve this year, down from 54 percent a year ago.

A preponderance of respondents, 47 percent, expects the economy to stay the same, up from 40 percent a year ago. The number of pessimists anticipating a worse economy this year grew to 9 percent, up from 6 percent a year ago.

The survey was conducted from Jan. 10 to Feb. 3 by Qmark Research and Polling for the Business Banking Council.

Factors that businesses cited as posing a threat to continued economic expansion included gas prices, rising interest rates, higher taxes and the general cost of doing business largely influenced by wages, healthcare and insurance.

"It was only a matter of time before rising costs dampened business enthusiasm and resulted in businesses believing that a greater portion of improving revenues would have to go to pay for increasing costs, slowing profit increases," Constance Lau, president and CEO of survey sponsor American Savings Bank, said in a statement.

Retailers as a group were much less optimistic on the outlook for their industry, with 21 percent saying they were somewhat pessimistic, compared with 5 percent a year earlier.

The response from retailers who said they were very optimistic dropped to 15 percent, compared with 52 percent a year earlier, while those who said they were somewhat optimistic grew to 58 percent, compared with 18 percent a year earlier.

"I think we're beginning to see some caution among retailers," said Barbara Ankersmit, Qmark president.

Savina Wendin, sales vice president at large local manufacturer and retailer Maui Divers, said finding employees to help the business grow is one of company's biggest challenges.

With 54 stores, Maui Divers has 100 retail job openings, including openings for 30 of the company's 64 store manager positions.

"With the proposed growth we have over the next five years, we have a desperate need for qualified leadership," Wendin said.

Business performance among all survey respondents was largely unchanged from last year. Some 56 percent reported higher gross revenue, compared with 54 percent a year ago. Fewer reported a revenue decline 12 percent compared with 24 percent in the same period.

Pretax profits rose for 39 percent of businesses surveyed, compared with 44 percent a year ago. Pretax profits fell for 22 percent of businesses vs. 23 percent during the same period.

"The sentiment among general study respondents is for a leveling of the growth in the economy prompting a wait-and-see attitude," the survey said.

The state Department of Business, Economic Development & Tourism forecasts growth of 6 percent this year, down from 7.8 percent in 2004 and an estimated 7.1 percent last year. The agency forecasts a 3.2 percent rise in real personal income and 1.5 percent job growth.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.