State Reports Economy Continues to Expand Slowly in 2018
Hawai‘i’s projected economic growth is continuing slowly, according to the Department of Business, Economic Development and Tourism’s (DBEDT) third quarter 2018 Statistical and Economic Report released on Aug. 22.
The report revised Hawai‘i’s projected economic growth downward to 1.5 percent for 2018 from 1.9 percent as predicted during the second quarter. Though labor market conditions continue to be the best in the nation and tourism growth is strong, the most recent data shows Hawai‘i’s statewide economic growth during the first quarter of 2018 was 1% and Honolulu consumer inflation during the first half of 2018 was 1.6%. Both figures fell short of earlier projections.
During the first seven months of 2018, Hawai‘i’s labor market continued to be the best in the nation with an average unemployment rate of 2.1%—the lowest in the nation and the lowest in the state’s history. The number of people either employed for pay or self-employed statewide was at a record high during the first seven months of the year at 673,200. The average number of people still seeking work and available to work fell to a historic low of 14,550 during the first seven months of 2018, according to DBEDT.
The analysis shows non-agriculture payroll jobs increased by 10,300 during the same period. Visitor arrivals in Hawai‘i by airplane totaled to 4.9 million during the first half of 2018. The corresponding nominal visitor expenditures increased by 10.8% during the first half of 2018. The total number of airplane seats on scheduled flights to Hawai‘i—a strong indicator for tourism trends—increased 10.2% during the first half of 2018 and is expected to increase by 6.2% during the rest of the year.
“Hawai‘i’s economic conditions remain healthy,” said DBEDT Director Luis P. Salaveria. “Even though we are now entering a slower growth period of around 1.5% annual growth, the lower growth rate will be accompanied by a lower rate of inflation. Our economic growth rate during the past three years (2015 to 2017) was 2.4%.”
The tourism industry accounted for more than half of the 10,300 jobs gains during the first seven months of 2018, according to DBEDT. Food services added 4,200 jobs and accommodation services added 1,000 jobs. Healthcare and social assistance added 2,700 jobs and professional and business services added 2,000 jobs. A few industries saw job losses including state government (-1,300 jobs), retail trade (-500 jobs), information (-200 jobs) and manufacturing (-100 jobs).
“We are encouraged to see that the value of private building permits increased 3.9% during the first half year of 2018. If this trend continues for the second half year, the construction industry will perform well in 2019, since it takes a few months to start construction after permits are issued,” said Chief State Economist Dr. Eugene Tian. “The value of government contracts awarded increased 151% during the first half of 2018.”
The most recent economic forecasts by more than 50 top economic research organizations (the Blue Chip Economic Indicators) released a report on Aug. 10 predicting steady growth for the U.S. and world economy in 2018 and 2019. The report also predicted accelerated growth for the U.S. economy of 2.9 percent in 2018 and 2.6 percent in 2019.
However, Hawai‘i’s economic growth rate will be lower than the national average, following historical trends. During the last 30 years, Hawai‘i’s annual economic growth rate was 1.8% on average while the economic growth rate for the U.S. was 2.5% during the same period.