DBEDT Notes State’s ‘Strong First-Quarter Growth’
The Department of Business, Economic Development, and Tourism highlights that the state experienced a “great first quarter” of 2016 in the Economic Outlook section of the recently released second quarter 2016 Statistical and Economic Report.
Within the report, DBEDT notes various strong aspects of the economy showing growth throughout.
“We are pleased to see that during the first quarter, total civilian labor force, civilian employment, and civilian non-agriculture payroll jobs were the highest quarterly numbers in Hawai’i’s history,” said DBEDT Director Luis P. Salaveria. “With nearly 2.2 million visitor arrivals, first quarter 2016 was the second best quarter since visitor numbers were recorded.”
There was an increase of 4.6 percent in general excise tax revenue. DBEDT says the number is an indicator of economic activities.
DBEDT say that Hawai’i’s growth is anticipated to continue at 2.3 percent in 2016 and 2.4 percent in 2017. The numbers are unchanged from the department’s February forecast.
In Hawai’i, the growth rates are higher than the U.S. economic growth rate, which is 1.8 percent in 2016 and 2.3 percent for 2017.
“Hawai’i experienced a record year in 2015 for the construction industry,” said Chief State Economist Eugene Tian. “The value of construction completed was $8.1 billion in 2015 and was historically the record high level in nominal terms.”
Construction activities have accelerated during the first quarter of 2016, growing by 20.4 percent during the quarter. The growth was the largest for the sector since 1990.
In March, there were 40,200 construction payroll workers working on construction projects in Hawai’i.
A total of 14,400 non-agricultural payroll jobs were added in the economy during the first quarter, representing a 2.3 percent increase.
All the industries gained jobs except for wholesale trade and state government. The construction industry contributed 46 percent of the total job gain with an increase of 6,600 jobs. Food services and drinking places added 2,700 jobs to its payroll. Healthcare and social assistance added 2,500 jobs, and professional and business services added 1,200 jobs. However, state government lost 700 jobs and wholesale trade lost 200 jobs during the first quarter of 2016, as compared with the same quarter a year ago.
Hawai’i’s unemployment rate during the first quarter of 2016 remained the same as the fourth quarter of 2015 at 3.2 percent and was the lowest since 2007. Nationally, Hawai’i’s unemployment rate ranked the third lowest among all states in the first quarter of 2016.
Unemployment rates for all the counties in the state fell under 4 percent in first quarter of 2016. Honolulu’s unemployment rate was the lowest among the counties at 3 percent, followed by Maui County at 3.4 percent, Kauai at 3.6 percent, and Hawaii County at 3.8 percent.
With 688,800 people in the civilian labor force and 667,100 people employed during the first quarter of 2016, the numbers show historical high levels for Hawai’i. The civilian non-agriculture payroll job count was also at a historically high level at 647,200 during the first quarter of this year.
As of the week of May 7, initial unemployment claims in 2016 decreased by 17.4 percent, from 1,491 claims per week in first quarter 2015 to 1,232 claims per week in first quarter 2016.
Compared with the construction boom during the first quarter of 2015, value of private construction decreased by 58 percent during the first quarter of 2016.
The biggest decrease was the permit value for commercial and industrial, which dropped by 92.1 percent. Value for residential permits decreased by 53.8 percent and value for additions and alterations decreased by 32.3 percent during the first quarter of 2016.
In March 2016, the value of residential permits increased by 10.4 percent after three months of consecutive declines. Since there is a lag between the time a building permit is issued and the actual construction start, the slowing down in building permits during the first quarter this year will result in slow construction toward the end of 2016.
Visitor arrivals increased by 3.6 percent and visitor expenditures increased by 2.6 percent during the first quarter of 2016.
With the data provided, DBEDT says it’s expected that the payroll job count will grow by 1.8 percent in 2016, higher than the 1.3 percent projected in the previous quarter. Job growth is projected to be at the 1.1 to 1.2 percent range after this year.
DBEDT also expects the unemployment rate will drop to 3.2 percent in 2016, lower than the 3.5 percent projected last quarter. The unemployment rate is expected to further drop to 3 percent in 2019.
Visitor arrivals are anticipated to reach 8.8 million in 2016, which would be a 2.2 percent increase from 2015. Visitor spending is also now projected to increase by 2.5 percent, slightly up from the 2.4 percent projected in the previous quarter.
Scheduled air seats increased 0.5 percent in the first quarter of 2016 and are expected to increase at the same rate during the second quarter of this year. Visitor arrivals growth in the next few years will be stable, according to DBEDT, who says they will range between 1.7 to 1.8 percent.
Nominal personal income is projected to grow at 4.8 percent in 2016, same as the projection in previous quarter.
According to the U.S. Bureau of Economic Analysis, Hawai’i’s personal income grew by 4.6 in 2015. With a lower inflation rate caused by the lower oil price, Hawai’i consumers benefited from a stronger purchasing power from income.
DBEDT estimates 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.
The consumer inflation rate of 2 percent for 2016 was kept by DBEDT due to the continued expectation on low oil prices.
New in this report is the data on Hawai’i home buyers by type of homes (single family or condominium), place of buyer’s residence (local, U.S. mainlander, and foreign), and county of property location.
From 2008 to 2015, a total of 144,382 homes were sold or resold in the state. Of these, 72.7 percent were purchased by Hawai’i residents, 23.3 percent were purchased by people residing on the U.S. mainland, and residents of foreign countries purchased 4 percent of these homes.
Of these from changed owners, 47 percent were single family homes, along with 53 percent from condominiums.
To review the full DBEDT Quarterly Statistical and Economic Report, visit the DBEDT website.