DBEDT KEEPS HAWAII ECONOMIC GROWTH FORECAST UNCHANGED
News Release from DBEDT, February 11, 2016
HONOLULU—The Department of Business, Economic Development and Tourism (DBEDT) released its first quarter 2016 Statistical and Economic Report. In the Economic Outlook section of the report, DBEDT keeps Hawaii economic growth rates unchanged from the previous forecast with Hawaii Gross Domestic Product growth at 2.3 percent in 2016 and 2.4 percent in 2017. These growth rates are similar to the U.S. economic growth as forecasted by the 50 top economic forecast organizations and published in Blue Chip Economic Indicators.
“We are pleased that Hawaii ended 2015 with the historical high levels for labor force, employment and job count, and are excited to see the trend continue in 2016,” said DBEDT Director Luis P. Salaveria. “The state’s unemployment rate was the sixth lowest in the nation, and the economic fundamentals remain positive.”
In 2015, 9,500 non-agriculture payroll jobs were added in the economy, representing a 1.5 percent increase. Healthcare and social assistance added the most jobs at 1,900, construction added 1,800, retail trade added 1,700, food services and drinking places added 1,600 jobs, professional and business services added 1,300 jobs. However, federal and state government each lost 500 jobs in 2015 as compared with 2014.
Hawaii’s unemployment rate in 2015 averaged 3.7 percent and was the lowest level since 2007. Unemployment rates for all the counties in the state fell under 5 percent in 2015 and the gaps between neighbor island counties and Honolulu are getting smaller. Honolulu’s unemployment rate was the lowest among the counties at 3.5 percent followed by Maui County at 3.8 percent in 2015. Though Hawaii and Kauai counties had annual average unemployment rates above 4 percent, the two counties experienced a significant improvement in unemployment during the year. The unemployment rate in Hawaii County was 5.2 percent in January 2015 and dropped to 3.7 percent in December 2015. Kauai County’s unemployment rate was at 4.9 percent at the beginning of 2015 and dropped to 3.5 percent at the end of 2015.
With 676,300 people in the labor force and 651,350 people employed in 2015, the numbers show historical high levels for Hawaii.
Initial unemployment claims in 2015 decreased by 18.4 percent, from 1,620 claims per week in 2014 to 1,322 claims per week in 2015. The declining trend continues during the first month of 2016. In January 2016, initial unemployment claims declined 31.4 percent from the same month in 2015.
In 2015, the state saw a great year for the construction industry. Contracting tax base, an indicator for construction completed, reached $6 billion during the first three quarters of 2015, representing 16.3 percent increase from the same period in the prior year.
Government contracts awarded, which includes federal, state, and county government construction projects (excluding the Honolulu rail project), increased 41.8 percent in 2015. The state government has budgeted $1.6 billion in capital improvement projects for fiscal year 2016.
The construction industry had the highest job growth among all the industries in the state in 2015 at 5.7 percent. The construction job increase accelerated toward the end of 2015 with double digit increase in November and December when many construction projects fought for completion before the end of the year.
Future construction activity, as indicated by the values of building permits issued, looks bright in 2016. The total value of private building permits issued in 2015 increased 19.6 percent from a year ago. Leading the increase was the value of residential building permits, which increased by 67.5 percent, followed by the value of commercial and industrial permits at 41 percent. With the completion of the Ala Moana shopping center renovation, the value of additions and alteration permits decreased 12.1 percent in 2015.
DBEDT expects payroll job count will grow by 1.3 percent in 2016 and at 1.1 to 1.2 percent for the years after that.
DBEDT expects the unemployment rate will drop to 3.5 percent in 2016, lower than the 3.7 percent projected last quarter. The unemployment rate is expected to further drop to 3.1 percent in 2019.
Visitor arrivals created a new record in 2015 with 8.6 million visitors. Visitor spending increased 2.3 percent to $15.3 billion in 2015.
DBEDT expect that visitor arrivals will reach 8.8 million in 2016, or 1.9 percent increase from 2015. However, with the strong US dollar and the weakening of foreign currency, visitor spending is now projected to increase by 2.4 percent, down from the 3.5 percent projected in the previous quarter.
Scheduled air seats will increase by 3.2 percent in the first quarter of 2016, indicating continued strong demand for travel in 2016. Visitor arrivals growth in the next few years will be stabled in a range between 1.8 to 1.9 percent.
Nominal (no inflation adjustment) personal income is projected to grow at 4.8 percent in 2016, same as the projection in November last year. According to the U.S. Bureau of Economic Analysis, Hawaii personal income grew by 4.7 percent during the first nine months of 2015. With a lower inflation rate caused by the lower oil price, Hawaii consumers benefited from a stronger purchasing power from income. DBEDT estimated that real personal income increased by 3.6 percent in 2015 and will increase by 3 percent in 2016. These real personal income growth rates are the same as those projected in the previous quarter.
DBEDT lowered its projection for the consumer inflation rate from 2.3 percent to 2 percent for 2016 due to the continued expectation on low oil prices.
The DBEDT Quarterly Statistical and Economic Report contains more than 100 tables of the most recent quarterly data on Hawaii’s economy as well as narrative explanations of the trends in these data.
The full report is available at: dbedt.hawaii.gov/economic/qser.