Business leaders are more likely to hire extra people and invest in their businesses this year as confidence rises.

But caution over the future remains, with particular concerns about the political environment and the need for business growth and investment from overseas.

These were some of the key findings from the HSBC Business Confidence Index survey, conducted by Bermudian firm Total Research Associates (TRA) in conjunction with Canadian market research firm Corporate Research Associates (CRA) and sponsors HSBC Bank Bermuda.

A total of 105 prominent business people from a broad swathe of the economy responded between November 20 and December 5 last year. Nearly 400 were invited to participate and the response rate was 26.5 per cent.

The Business Confidence Index, based on a benchmark of 100 from the 2014 results, rose to 106.5, up one point from the last survey in June last year.

TRA said improving business confidence coincided with consumer confidence hitting an eight-year high in December, as measured by the research firm’s long-running Omnibus survey.

The results were unveiled in an event at HSBC’s Harbourview Building this morning, hosted by Steven Spencer-Arscott, chief operating officer of TRA and Margaret Chapman, presdident of CRA, who gave a presentation on the findings.

The improving economy was a source of optimism, with 79 per cent believing the economy is now moving in the right direction, up from 70 per cent last June and 49 per cent in 2014.

About half had experienced improved economic conditions in the past year, while most of the rest said conditions were about the same.

The signs for increased business investment, a key confidence indicator and growth driver, are promising. Of the respondents, 42 per cent said they planned to raise their capital expenditure this year, while 54 per cent said it would remain unchanged and just 4 per cent said it would decrease.

A trend of improving revenue for companies is also becoming evident in the survey data. A total of 38 per cent of respondents said their revenue had increased over the past year, up from 33 per cent and 24 per cent respectively in the past two surveys.

Meanwhile 33 per cent said their revenue was flat, while 29 per cent said it had fallen.

On staffing levels, 28 per cent said they had increased headcount last year, while 56 per cent said it remained unchanged.

An element of caution is also apparent in that 31 per cent said they had left positions vacant, while 18 per cent have made people redundant over the past year.

The top three challenges cited by business leaders were the high cost of doing business in Bermuda (39 per cent), government leadership and politics (37 per cent) and the lack of business growth and foreign investment (25 per cent).

The survey organisers said the findings appeared to show that the economy may have bottomed in 2014.

“Nonetheless, confidence in the economic future of Bermuda continues to be somewhat muted and cautious,” Total Research Associates noted in a statement.

“That said, in assessing their own businesses, more leaders report growth than declines in revenue, and capital expenditures are expected to increase in the private sector over the next 12 months.

“Organisations also expect to increase their staffing in the coming year, with the majority of new hires expected to be local rather than from overseas.”

Of those intending to increase their staff, 82 per cent said they would be looking to hire locally and 18 per cent from overseas.

The survey also reveals suggestions for how the business climate could be improved in Bermuda, with political stability, along with increased foreign investment being key, as well as other factors such as improving immigration and the work permit process, better taxes, and improved education and training for Bermudians.

Only 34 per cent of respondents believed that the business community was doing enough to foster a positive business environment, something Ms Chapman suggested was a “call to action” for organisations to work together in promoting the interests of Bermuda as a whole.