Most businesses leaders believe Bermuda’s economy is improving — but their confidence in longer-term economic prospects remains fragile and more businesses are still cutting staff than hiring.

Those were some of the findings of a survey for the inaugural Bermuda Business Confidence Report, conducted by Bermuda’s Total Research Associates Ltd (TRA), partnering with Canadian market research firm Corporate Research Associates (CRA) and HSBC Bank Bermuda.

The survey results were revealed yesterday in a presentation by CRA chief executive officer Don Mills before an audience of business leaders in HSBC’s Harbourview building on Front Street.

Mr Mills said the Island’s economy had shrunk by about ten per cent, in real terms, since 2009, and that the decline may have bottomed.

“I see signs that we may have turned a corner here,” he said. “The ‘new normal’ is a smaller economy and people appear to be adapting to it.

“The only way to get back to 2008 is if something different happens — you can’t keep doing the same thing and expect different results.

“The economy is built around international business, which is going through a period of consolidation, and tourism, which is still struggling. Diversifying the economy is the key to future growth.”

Of the 84 respondents, comprising both local and international business decision makers, 62 per cent believed the Bermuda economy would improve over the next 12 months, while 4 per cent felt it would worsen.

Fifty per cent believed the economy was better than last year and 39 per cent about the same, while 11 per cent thought it was worse.

The survey was carried out before the announcement that Bermuda would host the 2017 America’s Cup.

The survey found moderate confidence in the Island’s economic future. On a scale from one (not at all confident) to ten (completely confident), the mean rating was 5.7.

The cost of doing business topped the list of issues facing business today. That was followed by the declining population, the lack of qualified workers, Government/politics, and the poor economy.

Asked to suggest changes that would positively impact the Bermuda business climate, 39 per cent of answers fell into the business development/growth/increased foreign investment category. Better government leadership/political stability tied with Immigration and improving the work permit process got the second-most mentions. Then came population increase, better/more education and training for Bermudians, and more acceptance of foreign workers.

Twice as many leaders (36 per cent) said their organisation’s economic well-being had improved in the past year, as said it had worsened (18 per cent), while 46 per cent said it was about the same.

The results do not suggest a strong rebound in the jobs market any time soon. While a quarter of respondents said they had added staff in the past year, one third said they had reduced the number of employees, while 43 per cent said their staffing was unchanged. In the next 12 months, 18 per cent expect to hire more staff, while 19 per cent plan to cut headcount.

Nearly half of respondents said their organisation had frozen salaries or wages in response to economic conditions. Other defensive actions included leaving vacant positions unfilled (42 per cent), internal restructuring or transfers (39 per cent), made positions redundant (31 per cent), reduced standard weekly work hours (23 per cent), cut back on employee benefits (20 per cent) and put a freeze on hiring (18 per cent).

The business confidence survey has been four years in the making, TRA managing director Graham Redford said, and it became reality with the support of HSBC Bermuda.

Richard Moseley, chief executive officer of HSBC Bank Bermuda, said: “Understanding what’s happening in the economy is crucial to our customers and to HSBC. In my position, I get a lot of anecdotal information, but to get this information in a structured and comprehensive form is very valuable.

“This type of information can help Bermuda do well and if Bermuda does well, HSBC Bermuda does well.”

The results of the 2014 survey will be used as the benchmark for comparison with future surveys. The intention is to undertake the survey twice a year.

Three hundred business leaders were approached for the survey and 84 participated. Mr Mills was hopeful that more would take part in future surveys, as they became familiar with the project.