Hawai‘i’s Economy Expected to Continue Growth in 2018

DBEDT recently released its second quarter 2018 Statistical and Economic Report for the state, showing that economic growth in 2018 will be better than previously projected. The improved predictions are being attributed to strong performance in the tourism sector and continued improvement in the labor market.

According to the report, Hawai‘i continued to be the best labor market in the nation with an unemployment rate of two percent during the first quarter of 2018. This number was the lowest in the nation and the lowest rate in Hawai‘i’s history.

Statewide, the number of people who were either employed for pay or self-employed was at a record high during the first quarter of 2018. Non-agriculture payroll jobs increased by 8,800 during the same period. Visitor arrivals registered the best quarter during the first quarter of 2018 with 2.4 million visitors coming to Hawai‘i by plane travel. The corresponding nominal visitor expenditures increased 10.1 percent during the first quarter of 2018. The total number of air seats on scheduled flights to Hawai‘i—a leading indicator of the tourism industry—increased 10.6 percent during the first quarter of 2018 and is expected to increase by 7.4 percent during the rest of 2018.

“Tourism, professional services, and the healthcare industries continue to be the drivers of our economic growth,” said DBEDT director Luis P. Salaveria. “These three industry sectors added more than 10,000 jobs during the first quarter of 2018.”

The report also shows industries which had challenges in job growth. The state government lost 1,700 jobs and the retail trade sector lost 1,000 jobs during the first quarter of 2018. Losses in state jobs may be caused by challenges in filling vacant positions with a limited labor supply in the state.

Statistics for construction were mixed during the first quarter of 2018. The value of statewide private building permits decreased 23.9 percent with most of the decrease occurring in Honolulu County with a 37.2 percent decrease during the first quarter of 2018. Honolulu accounted for 56.3 percent of the total statewide private construction value. Maui County also saw decreases in private building permits value at 9.2 percent, while private building permit values for Hawai‘i and Kaua‘i counties increased at 15.1 percent and 28.7 percent, respectively.

“The real estate market continued performing well during the first four months of 2018,” said Chief State Economist Dr. Eugene Tian. “Both sales and median prices of homes increased for all the counties during the first four months of 2018 with the exception on the median condo price on Kaua‘i, which decreased by 1.8 percent. On O‘ahu, the median price for single family homes increased 4.6 percent and the median price for condos increased by 7.5 percent during the first four months of 2018. Investment in residential real estate by out-of-state residents is still strong. During the first quarter of 2018, 28.1 percent of the homes were sold to out-of-state residents, the highest increase since the second quarter of 2012.”

The most recent economic forecasts by more than 50 top economic research organizations (the Blue Chip Economic Indicators), released on May 10, reported that the U.S. and the world economies will experience steady growth in 2018 and 2019, and the U.S. economy will experience accelerated growth at 2.8 percent in 2018. Hawai‘i will benefit from the accelerated U.S. economic growth since more than 61 percent of Hawai‘i’s visitor spending comes from U.S. mainland visitors. The U.S. economy is expected to grow at 2.6 percent in 2019, according to the consensus forecast.