DBEDT Projects Steady Growth Rates in 2016
In the Economic Outlook section of the recently released first quarter 2016 Statistical and Economic Report, DBEDT holds the growth rate an unchanged number from the previous forecast, listing Hawai’i Gross Domestic Product growth at 2.3 percent in 2016 and 2.4 percent in 2017.
Overall, the numbers are comparable to what is being forecasted for the United States’ economic growth, published in the Blue Chip Economic Indicators.
“We are pleased that Hawai’i 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.”
A total of 9,500 non-agricultural payroll jobs were added to Hawai’i’s economy, an increase of 1.5 percent.
Healthcare and social assistance added the greatest number of jobs at 1,900. Construction added just under that number with 1,800 jobs, while retail grew by 1,700. Food services and drinking places saw an increase of 1,600 jobs in 2015, while professional and business services added 1,300 jobs.
Job losses were also seen during the past year. The losses were within the federal and state government categories, where each lost 500 jobs in 2015.
Last year, the unemployment rate in the state averaged 3.7 percent. The number was the lowest level of unemployment since 2007. Each of the state’s counties fell under the five percent rate in 2015, with gaps between neighbor island counties and Honolulu smaller that they have previously been.
On the Big Island, an average unemployment rate of over four percent was noted throughout the year, tying with Kauai County. Both counties also saw improvements in their unemployment rates as the year went on. On the Big Island, the unemployment rate was 5.2 percent in January 2015. By the last month of the year, that number had dropped to 3.7 percent.
Honolulu’s unemployment rate was the lowest of all counties at 3.5 percent. Maui County held the second lowest unemployment rate for the year at 3.8 percent.
There were a total of 676,300 people in the labor force in 2015 and 651,350 people employed. DBEDT notes the numbers as “historically high.”
Unemployment claims in 2015 decreased overall by 18.4 percent from 1,620 claims per week in 2014 to 1,322 claims per week in 2015. The trend has continued into 2016, as January 2016 initial unemployment claims were reportedly down 31.4 percent, compared to January 2015.
The construction industry saw a “great year” in 2015, according to DBEDT. Contracting tax base used as an indicator for construction completed reached $6 billion during the first three quarters of 2015. The amount represents 16.3 percent more than the same period in 2014.
Federal, state, and county government construction projects, not including the Honolulu rail project, increased by 41.8 percent last year. The fiscal year 2016 has $1.6 billion budgeted by state government for improvement projects.
Among all industries in the state, the construction industry had the highest job growth at 5.7 percent. Towards the end of 2015, a double digit increase took place as construction projects fought to be completed as the year came to a close.
Future construction activity, as indicated by the values of building permits issued, looks bright in 2016, according to DBEDT. The total value of private building permits issued in 2015 increased 19.6 percent, compared to the year prior. The increase was led by a rise in the value of residential building permits, which increased by 67.5 percent, followed by the value of commercial and industrial permits at 41 percent.
It is expected by DBEDT that payroll job counts will grow by 1.3 percent in 2016, followed by 1.1 to 1.2 percent for the years following.
In addition, 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.
Visitors to the islands set a record in 2015, marked at 8.6 million coming to the island. The increase in arrivals was followed by an increase in spending by 2.3 percent to $15.3 billion in 2015.
DBEDT expects that visitor arrivals will reach 8.8 million in 2016, or a 1.9 percent increase from 2015. However, with the strong U.S. 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.
Air seats are also expected to increase, according to DBEDT. A 3.2 percent increase is anticipated in the first quarter of 2016, and a stable visitor arrival growth is also expected over the next few years, ranging between 1.8 to 1.9 percent.
As projected in November 2015, nominal personal income is projected to grown at 4.8 percent in 2016. The United States Bureau of Economic Analysis says that Hawai’i’s personal income grew by 4.7 percent during the first nine months of 2015. Lower inflation rates caused by lower oil prices led Hawai’i consumers to benefit from a stronger purchasing power from income.
Nominal (no inflation adjustment) personal income is projected to grow at 4.8 percent in 2016, same as the projection in November last year. The U.S. Bureau of DBEDT estimates that real personal income increased by 3.6 percent in 2015 and will increase by three percent in 2016. These real personal income growth rates are the same as those projected in the previous quarter.
Consumer inflation rate projections were lowered by DBEDT from 2.3 percent to 2 percent for 2016 due to the continued expectation on low oil prices.
To review the full DBEDT Quarterly Statistical and Economic Report, visit the DBEDT website.