HAWAII’S ECONOMY MOVES FORWARD WITH MODERATE GROWTH

News Release from DBEDT, November 16, 2016

HONOLULU—The Department of Business, Economic Development and Tourism (DBEDT) released its fourth quarter 2016 Statistical and Economic Report, where the data shows that stable growth remains for Hawaii’s economy.

“We are encouraged to see the continued growth in our payroll jobs,” said DBEDT Director Luis P. Salaveria. “During the first three quarters of this year, 14,000 new jobs were added and that’s the highest job gain since the great recession in 2008. Forty percent of the job gains came from the construction industry, which is on track to set a new record year in 2016.”

DBEDT revised its projection on Hawaii’s economic growth, as measured by the growth of real gross domestic product (GDP), to 2 percent for 2016, slightly higher than the projection made in the previous quarter. Hawaii economic growth rates are expected to diminish to 1.6 percent by 2019 mainly due to the expected acceleration in inflation. The 2016 economic growth rate is higher than the U.S. economic growth rate of 1.5 percent for 2016, as forecasted by the 50 top economic forecast organizations and published in “Blue Chip Economic Indicators.” For 2017, the U.S. economic growth rate was projected to be 2.2 percent, higher than the Hawaii economic growth rate of 1.9 percent.

“Tourism has been performing better than expected and we have revised our visitor arrival projection to 2.3 percent and visitor spending projection to 3.9 percent, both of which are higher than previously projected,” said Chief State Economist Eugene Tian. “Due to the appreciation of their currency, both Japanese and Canadian visitor daily spending have increased during the last few months. Year-to-date through September, visitor arrivals increased by 2.6 percent and visitor spending increased by 3.7 percent. Visitor arrivals is likely to be another record year in 2016.”

Leading the job growth this year are the construction jobs which grew 16.5 percent during the first nine months of 2016. Educational services, entertainment, and food services each grew by 4.3 percent during the same time period. Job loss mainly happened in wholesale trade and state government.

Hawaii’s unemployment rate during the first nine months of 2016 averaged at 3.3 percent, 0.5 percentage points lower than the same period in 2015 and ranked Hawaii the fifth lowest in the nation. Honolulu’s unemployment rate was the lowest among the counties at 3.1 percent, followed by Maui County at 3.4 percent, Kauai at 3.6 percent and Hawaii County at 4.1 percent during the first nine months of 2016.

With 686,950 people in the civilian labor force and 664,450 people employed during the first nine months of 2016, the numbers show historical high levels for Hawaii. Civilian non-agriculture payroll job count was also at a historical high level at 647,700 during the first nine months of this year.

As of the week of Nov. 5, initial unemployment claims in 2016 decreased by 8.7 percent. However, the initial unemployment claims have been flat and similar to the 2015 levels since April this year, rather than the continued declining trend as experienced in the past few years.

With the economic data so far this year, DBEDT expects that the payroll job count will grow by 2 percent in 2016, 0.2 of a percentage higher than that projected in the previous quarter. Job growth is projected to be at 1.1 to 1.2 percent for the years after 2016.

DBEDT expects the unemployment rate will end up at 3.3 percent in 2016 and will rise to 3.6 percent in 2019.

DBEDT expects that visitor arrivals will reach 8.9 million in 2016, a 2.3 percent increase from 2015. Visitor spending is projected to increase by 3.9 percent to $15.7 billion. Visitor arrivals growth in the next few years will be diminished to below 2 percent.

Nominal (no inflation adjustment) personal income is projected to grow at around 4.7 to 4.8 percent during the next few years, same as the projection in the previous quarter. According to the U.S. Bureau of Economic Analysis, Hawaii personal income grew by 4.5 percent during the first half of 2016. DBEDT projects that real personal income will increase in the neighborhood of 2.5 percent in the next few years.

DBEDT revised its projection on the consumer inflation rate upward for the future years to between 2.6 and 2.8 percent during the 2017-2019 period, higher than its previous quarter projection of between 2.2 to 2.4 percent.

The DBEDT Quarterly Statistical and Economic Report contains more than 120 tables of the most recent quarterly data on Hawaii’s economy as well as narrative explanations of the trends in these data.

PDF: The full report is available here.

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