DBEDT Predicts ‘Stable Economic Growth’ for Hawai‘i
Overall economic conditions in the State of Hawai‘i are expected to remain stable into the next few years, with growth continuing at about 1.5 percent, according to the Department of Business, Economic Development and Tourism’s (DBEDT) fourth quarter 2017 Statistical and Economic Report.
Analysis shows the tourism industry performed better than expected during the first 10 months of 2017. Visitor arrivals increased 4.9 percent and visitor spending increased 7.1 percent during the first nine months this year. The daily passenger count increased by 4.2 percent in October, which indicates that the October visitor count will be an overall increase. During the first 20 days of November, passenger count increased by 5.7 percent. The current statistics indicate another record number of visitors in Hawai‘i this year.
“We are happy to learn that scheduled air seats, the supply side of the tourism industry, will increase by 8.5 percent during the first three quarters of 2018,” said DBEDT Director Luis P. Salaveria. “Based on the current trend, there is the potential that we may be welcoming more than 9.5 million visitors in 2018.”
“It is a positive sign that direct flights to the neighbor islands during the next three quarters is expected to increase by more than 20 percent,” explained State Economist Dr. Eugene Tian. “That will help to ease the inter-island flight shortage due to Island Air ceasing operations on November 10.”
Labor market conditions in Hawai‘i have been among the highest in the nation over the last few years, according to DBEDT. In October 2017, seasonally adjusted unemployment rates hit a record low rate of 2.2 percent—the lowest in the nation during the month of October. Year-to-date, Hawai‘i’s seasonally adjusted unemployment rate ranked the third lowest in the nation. For the not seasonally adjusted rate, Hawai‘i ranked the lowest.
During October, the state reported a gain in 7,800 additional payroll jobs compared with the same time last year. Most job increases occurred in tourism-related industries. Retail trade and food services each added 2,500 jobs during the first 10 months; accommodations added 1,100 hotel jobs.
Several industries showed job losses. Wholesale trade lost 600 jobs; financial activities and government sectors each lost 500 jobs; and manufacturing and construction each lost 400 jobs during the first 10 months of 2017.
In October, there were 12,850 people looking for jobs—the lowest number since January 2017.
During the first 10 months of the year, average labor force and employment numbers reached record high levels.
DBEDT reported that the value of private building permits increased 2.8 percent during the first nine months of 2017; the value of residential permits increased 14.7 percent; commercial and industrial permit values increased 119.4 percent; and value of additions and alterations decreased by 22.6 percent. The increase in building permit values will be reflected in construction activities next year, according to DBEDT.
Worldwide, economic growth is expected to continue in 2017 and 2018—especially those with high numbers of visitors coming to Hawai‘i. The U.S. economy is expected to grow by 2.2 percent in 2017 and 2.5 percent in 2018. Both estimates are higher than the growth rate of 2016.
In the fourth quarter report, DBEDT has revised the visitor industry forecast with visitor arrivals now growing at 4.6 percent for 2017, 2.3 percent for 2018 and 1.5 percent for 2019 and 2020. Visitor expenditures are expected to be at 6.7 percent for 2017, 3.9 percent for 2018, and 3.6 percent for 2019 and 2020.
DBEDT’s revised projections are measured by the real gross domestic product (GDP), upward from the third quarter projection to 1.7 percent for 2017, 1.5 percent for both 2018 and 2019, and 1.4 percent for 2020.
“The overall economic condition is good,” said Tian. “We have one of the best labor markets in the nation, tourism is performing well, our real estate market continues to be strong, and more building permits are being issued. The challenge is that not all the industries are performing well, some industries continue to lose jobs.”
DBEDT kept its projection on non-farm payroll job count unchanged at 1.0 percent in 2017 and falling to 0.8 percent in 2020. The unemployment rate projection now is lower for 2017 at 2.6 percent and will gradually increase to 3.4 percent by 2020.
DBEDT kept the nominal personal income growth rates unchanged from the previous quarter forecast in the range of 3.3 and 3.5 percent. Real personal income projections were also kept the same as the previous quarter forecast at rates below 2.0 percent for the next few years.
DBEDT kept its projections for the Honolulu consumer inflation rates unchanged from the forecast in the previous quarter at 2.5 percent for 2017, and 2.3 percent for the coming years. The consumer inflation rate for Honolulu during the first half of 2017 was 2.5 percent.
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/.