A recent poll of 200 Washington state business owners sponsored by Spokane-based Washington Trust Bank has found overall confidence in the economy to be the highest in the survey’s 25-year history.

The third-quarter business confidence survey conducted by Bellevue, Wash.-based Hebert Research Inc. asked business owners to rate their overall confidence in the business economy looking ahead 12 months. Ratings were on a scale of zero to 10, with 10 being the most confident.  

Counting all business owners surveyed in November, the average economic confidence ranking was greater than 6 statewide. 

Spokane business owners, however, which made up about 20 percent of those surveyed, were slightly less upbeat than their West Side and Tri-Cities/Wenatchee peers. The average overall confidence ranking for the Spokane area was a 6.65, while respondents in the Seattle, Tri-Cities/Wenatchee, and Bellevue areas showed average confidence ratings of 6.71, 6.84, and 6.87, respectively.

In last year’s survey for the third quarter of 2014, the average ranking statewide was 6.02, this year’s average ranking statewide was 6.74. 

In the record-setting benchmark, the latest survey found that some 7o.24 percent of respondents ranked their overall confidence in the state’s economy as high. That was down slightly from the prior quarter’s 74.2 percent. 

However, Jim Hebert, president of Hebert Research Inc., says the difference is not a large one, and in fact statistics point to the economy’s continued expansion. 

“When we look at this data we focus on trends, and one quarter doesn’t make a trend,” says Hebert. “When you compare this year to the previous third quarters from 2011 to 2014, this score has been steadily increasing each year.” 

Compared to the previous third quarters from 2011 to 2014, this score has increased by about 3.4 percentage points each year, the most significant increase occurring this year, with a 10.04 percent increase from the third-quarter of 2014 to the third-quarter of 2015. 

Despite Spokane having the lowest average confidence ranking, Hebert says the difference by location was also relatively small. 

“The average confidence ranking statewide was in the high sixes. The majority of business owners were confident in the economy, and those with lower or zero confidence rankings were rare.” 

Although Hebert does admit that this isn’t always the case, particularly in Spokane. 

“Spokane numbers are sometimes skewed because of their predisposition toward the ag industry, and other regional businesses,” he says. 

As Hebert explains, each industry has its own associated risks and as those risks increase, business owners’ confidence levels can decline. “We see it more with agriculture, and the ski industry because things like weather conditions affect production, which in turn affects prices and revenues. A business owner’s confidence ranking is affected by their interpretation of those numbers.”   

When asked, most respondents indicated that their confidence has increased as a result of increasing revenues, and improving economies on all levels—international, national, and state. 

Seventy-two percent of those surveyed expect an increase in prices and fees they charge customers by 1 percent to 10 percent. Sixteen percent expect no change, while 13 percent expect a decrease. 

The expected change in total revenue of those surveyed increased from 11.3 percent in the second quarter to 15.2 percent in the third quarter.

Just under half of businesses surveyed in the third quarter expect to see a 1 percent to 10 percent increase in total revenue during the next 12 months. Just over a fifth expect the increase to be between 11 percent and 26 percent, and 10 percent expect that number to be even higher. Twelve percent expect to see no change, and the remaining 11 percent expect a decrease from 1 percent to 25 percent.

Respondents also expect business expenses and cost to increase, with nearly two-thirds of businesses expecting costs to increase by 1 percent to 10 percent during the next 12 months. 

Businesses’ expected total change in capital expenditures for facilities and equipment also increased from the second quarter to the third quarter, jumping from 1.23 percent to 5.9 percent, the highest forecasted increase in capital expenditures seen during the past year. 

“Businesses are going to be making capital expenditures as a function of their increased confidence in the economy,” says Hebert. “We’ve seen this in the past too, when confidence is low, investing goes down. The higher the confidence, the more investing will occur.”

Although the survey lists businesses by revenue, Hebert estimates that most of those surveyed are small to mid-sized businesses. 

“Those single office, home office businesses, or SOHO businesses as we call them, make up some 50 percent of all businesses in Washington state,” he says. “Larger employers probably make up only about 3 or 4 percent of our survey sample.” 

Survey respondents were also asked to rank whether or not they were interested in creating a wellness program for their employees. 

Over two-thirds of respondents said they were somewhat to very interested, answering with a rating of six or higher. More respondents said they were very interested than not interested, accounting for 13.9 percent compared with 5.9 percent, respectively. The mean level of interest based on the responses was 6.28.   

The Hebert Research and Washington Trust Business Confidence Index, which has been posting quarterly results since 1991, is an economic indicator measuring the amount of optimism or pessimism that business managers feel about the prospects of their companies.