Hawai‘i’s Economy Continues Expansion
The Department of Business, Economic Development and Tourism (DBEDT) first quarter 2017 Statistical and Economic Report shows that Hawai‘i’s economy continues to expand at a slightly reduced rate.
According to the most recent data released on Feb. 2 from the U.S. Bureau of Economic Analysis, the state’s economic growth rate during the first three-quarters of 2016 was 2.1%, higher than the U.S. economic growth rate of 1.4% during the same time period.
“Hawai‘i had a great year in 2016 with 14,000 new payroll jobs created,” said DBEDT Director Luis P. Salaveria. “Almost every sector saw job increases except state government and wholesale trade. Our unemployment rate was the fourth lowest in the nation in 2016, and we expect our economic condition to remain stable in 2017.”
DBEDT revised its projection on Hawai‘i’s economic growth, as measured by the growth of real gross domestic product (GDP), to 1.8% for 2017, slightly lower than the 1.9% projection made in the previous quarter.
“The downward adjustment in Hawai‘i’s economic growth for 2017 was mainly due to the new projection on visitor expenditures for 2017,” said Chief State Economist Eugene Tian. “We expect visitor arrivals will reach more than 9 million in 2017, about the same as we forecasted in the previous quarter. However, we now expect visitor days will grow by 1.4% in 2017, lower than the 2% we forecasted in November 2016. We will see fewer or slower growth from those longer length-of-stay markets such as Oceania, Canada, Europe and U.S. West. The slower growth in visitor days will lead to slower growth in visitor expenditures.”
According to DBEDT, passenger count data, total passengers to Hawai‘i increased 3.8% in January 2017, as compared with the same month last year. Passengers on domestic flights increased 2.2% and passengers on international flights increased 8.1%.
The end of 2016 saw historic high levels of labor force, employment and payroll job count. Statewide unemployment rate (not seasonally adjusted) fell to 2.6% by the end of the year. By December 2016, unemployment rates of all the counties fell below 3%, except Hawai‘i County where unemployment rate was slightly higher than others, at 3.1%.
In 2016, four sectors were the main driving forces for job gains: construction, tourism, health care and professional services. Construction led the job gain at 4,600; followed by Food Services and Drinking Places at 2,800; Health Care and Social Assistance at 2,500; Accommodations at 1,000; and Professional and Business Services added 900 jobs.
In 2016, initial unemployment claims decreased by 6.4%. However, the decrease occurred mostly in the beginning months of the year. Since October 2016, initial unemployment claims have been higher than the same period in the previous year, and the trend continued into January 2017.
In 2016, total visitor arrivals increased 3% and visitor expenditures increased 4.2%, both were higher than projected by DBEDT.
At of the end of 2016, value of private building permits was down by 18.2%. Value of commercial and industrial permits decreased the most at 70%, while residential permits decreased by 12.3%t. The value of additions and alterations decreased by 1.7%.
According to the February 2017 Blue Chip Economic Indicators, most of the economies in the world will see steady economic growth in 2017 and 2018, especially the three major Hawai‘i visitor source countries—U.S., Canada, and Japan. The U.S. economy will expand 2.3%, Canadian economy will grow 1.9%, and Japanese economy will increase 1% in 2017, where all of the growth rates are higher than those experienced in 2016.
With the economic data currently available, DBEDT expects that the economic growth rate will be 1.8% in 2017, and will slightly decrease to 1.6% by the year 2020.
Non-agriculture payroll job count will grow by 1.2% in 2017, the same as projected in the previous quarter. Job growth is projected to be at 1.1% for the years after 2017.
DBEDT expects the unemployment rate will increase slightly in 2017 to 3.4% and will rise to 3.6%in 2020.
Nominal (no inflation adjustment) personal income is projected to grow at around 4.7 to 4.8% during the next few years, same as the projection in the previous quarter. According to the U.S. Bureau of Economic Analysis, Hawai‘i personal income grew by 4.5% during the first three-quarters of 2016. DBEDT projects that real personal income will increase in the neighborhood of 2.5% in the next few years.
DBEDT lowered its projection on the consumer inflation rates to a range between 2.3 and 2.5% during the 2017-2020 period. The actual consumer inflation rate in 2016, as reported by the U.S. Bureau of Labor Statistics, was 2%, lower than the 2.3% projected by DBEDT in November 2016.
The DBEDT Quarterly Statistical and Economic Report contains more than 120 tables of the most recent quarterly data on Hawai‘i’s economy as well as narrative explanations of the trends in these data.
The full report is available at dbedt.hawaii.gov/economic/qser.