A new survey suggests that revenue and pretax profit declined last year for slightly more than half of all Hawai'i companies, reflecting the extent to which the recession has taken a toll on local businesses.

A little more than half of Hawai'i business leaders also expect the economy will take at least two more years to improve, the survey said.

The feedback largely presents a gloomy view of the local business climate, but also shows that a significant share of companies last year continued to grow or at least maintain their business. Also, just more than a third of survey respondents expect the economy to begin improving within a year.

Dozens of Hawai'i businesses and local branches of Mainland chains have closed over the past year, putting thousands of Island residents out of work. The restaurant sector has been particularly hard hit, with casualties including the Flamingo Restaurant on Kapi'olani Boulevard; Brew Moon, E&O Trading and Compadres in Ward Centre; and Nick's Fishmarket in Waikiki.

402 COMPANIES

The survey results are from a poll taken by QMark Research and Polling for the Business Banking Council. The poll, sponsored by The Chamber of Commerce of Hawai'i, interviewed 402 companies statewide from Jan. 8 to 22.

Barbara Ankersmit, QMark president, said optimism and performance of local businesses are at their lowest since the semiannual survey began in mid-1998, though that's not surprising given Hawai'i is experiencing its worst recession since statehood.

A year ago, local companies were most concerned about rising costs of doing business. That has given way to concerns about the credit crunch and consumer confidence.

"It's amazing how quick that changed," Ankersmit said.

According to the survey, 54 percent of respondents said gross revenue fell last year, compared with 27 percent that reported a decline a year earlier.

Some 27 percent of companies surveyed said revenue rose last year, compared with 45 percent a year earlier. Another 14 percent said revenue was unchanged, down from 22 percent a year earlier.

PROFIT DROPS

The numbers were similar for pretax profit, with 55 percent reporting a decrease, 22 percent reporting an increase and 11 percent reporting no change. A year earlier, the responses were 32 percent, 31 percent and 22 percent, respectively.

Most businesses, 56 percent, said they maintained a level staff last year compared with 35 percent that reduced employment and 9 percent that increased employment. A year earlier, 59 percent reported no change in employment, 18 percent said they employed fewer people and 23 percent said they hired more people.

Ankersmit said employment levels typically lag changes in revenues and profit, so she expects the employment responses to significantly worsen in the next survey, especially knowing that Hawai'i's seasonally adjusted jobless rate jumped from 5.1 percent in December to 7.1 percent in March.

An index QMark created to sum up business performance sank to 92 in the January survey from 114 a year earlier. At its peak, the index reached 131 in mid-2006. Now it is at a low since the survey and index were started in mid-1998 with the index set at 100.

OPTIMISM PLUMMETS

A similar index measuring business optimism also hit a low of 80, down from 104 a year earlier. The optimism index peaked in early 2005 at 138, but had dropped to 81 in mid-2008 as concerns over energy and other costs scared many companies.

One factor in the record-low optimism index is a view from 52 percent of respondents who believe the economy won't improve for at least two years. Another 8 percent don't expect an improvement in the next five years. On the brighter side, 36 percent of respondents believe the local economy will improve within a year.

QMark said the survey's sample size gives the results a 95 percent level of confidence that responses would be no more than 4.9 percentage points higher or lower if all Hawai'i businesses were asked the same questions.

The sample was balanced to fairly represent the state's mix of small, medium and large businesses based on their number of employees, which ranged from three to more than 100.

Of the 402 businesses surveyed, QMark examined 100 responses from retailers and found that they had an optimism index score one point below the broad index of 80, and a performance index score five points higher than the broad index of 92.