Business confidence has grown over the past few months, a major survey has shown.

And Bermuda-only businesses outstripped their international counterparts in the optimism stakes.

Local business hit 105.9 in the second survey of last year, up 5.3 points from the first wave, while firms with Bermuda and international operations fell 3.1 points to 104.4 compared to the first wave of the 2016 survey.

Overall, the latest Bermuda Business Confidence Index showed an uptick in the second wave of results for last year, up from 103.1 to 105.1 measured against a benchmark of 100 set in 2014.

And smaller firms showed more optimism than larger ones, with companies with 20 or fewer staff recording a score of 106.5.

Companies with between 21 and 50 staff logged a score of 102.9, while those with more than 50 employees scored 105.2.

The survey, carried out for bankers HSBC, found that the biggest area of concern in the business world was domestic — Government and politics. A total of 63 per cent said that was a key issue, up 15 points over the last six months.

The state of politics was followed by the cost of doing business, with a tie for third place between lack of development and business growth and taxation/increased taxation.

The survey was completed by 162 companies across the business spectrum between November 23, 2016 and January 25, 2017. It identified a need for “better political leadership and stability”, as well as improved immigration and work permit process, business growth and increased foreign investment, better taxation, less red tape and improved education.

The business world also said that a positive business environment could be promoted by more transparency, reduced taxes and closer collaboration between the two political parties.

Business leaders also said that collaboration between businesses, closer engagement with Government, better support for education and training and better promotion and marketing, as well as extra support for small local businesses would help create a thriving environment.

The report said: “While still at moderate levels, there continues to be growing confidence evident in Bermuda’s economic future.”

A total of 24 per cent of those surveyed said they had a high degree of confidence in the island’s economic future, up 11 per cent on the first wave survey.

But 31 per cent expressed a low degree of confidence, down three per cent on the 34 per cent recorded in the previous survey.

And 79 per cent said they expected the economy to improve over the next 12 months, up four per cent on the previous survey and 17 per cent on the 2014 rating.

Just 18 per cent said the economy would be static and three per cent that it would be worse.

A total of 40 per cent of businesses, up 16 per cent from 2014, said they had increased revenue in the past year, while 20 per cent said revenue had dropped, down 18 per cent on 2014.

But 64 per cent predicted increased revenue in the next year, up 26 points on the survey two years’ prior, with only six per cent expecting a decrease, four per cent down on the figure for 2014.

Wage increases at 70 per cent of the firms surveyed went up over the previous year compared to 48 per cent of firms in 2014.

The average increase was 1.8 per cent, up from 1.2 per cent in 2014, higher than the 1.5 per cent inflation rate recorded for 2015.

The results of the survey by Corporate Research Associates and Total Research Associates were presented at the HSBC’s Front Street headquarters on Friday.

John Wight, chairman of the Bermuda Chamber of Commerce, and one of three panellists alongside Marico Thomas, vice-president of the Bermuda Economic Development Corporation and HSBC CEO Mark Watkinson, said: “I wasn’t surprised by the results.

“I think that by every gauge you look at, there have been improvements over the past year.”

He added that and increase in container volumes unloaded at the docks was a good indicator the economic health of the country.

Mr Wight said: “Whichever gauge you look at, things are definitely moving in the right direction.”

Mr Thomas added: “The America’s Cup has been a lift for the entire island — everybody’s busier in preparation.”

And he added that even critics of the event had noticed an increase in business as a result of the global event being hosted in Bermuda.

Mr Watkinson said: “The America’s Cup for the local economy is super-important and just what the island needs. My concern is what happens in July — does the economy fall off a cliff?

“There is definitely a positive spin-off from the America’s Cup, apart from it just being held here. It’s just the sort of brand we need to help build our own brand.

“We have got to get that bridge to boost our brand and hopefully converting that to more tourists.”

Mr Thomas added: that “optimism will go down pretty fast” following the Cup “if momentum in tourism is not maintained”.