The Department of Business, Economic Development and Tourism (DBEDT) released its first quarter 2017 Statistical and Economic Report, which shows Hawaii’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, Hawaii’s economic growth rate during the first three quarters of 2016 was 2.1 percent, higher than the U.S. economic growth rate of 1.4 percent during the same time period.
“Hawaii 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 Hawaii’s economic growth, as measured by the growth of real gross domestic product (GDP), to 1.8 percent for 2017, slightly lower than the 1.9 percent projection made in the previous quarter.
“The downward adjustment in Hawaii’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 percent in 2017, lower than the 2 percent 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 Hawaii increased 3.8 percent in January 2017, as compared with the same month last year. Passengers on domestic flights increased 2.2 percent and passengers on international flights increased 8.1 percent.
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 percent by the end of the year. By December 2016, unemployment rates of all the counties fell below 3 percent, except Hawaii County where unemployment rate was slightly higher than others, at 3.1 percent.
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 percent. 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 percent and visitor expenditures increased 4.2 percent, both were higher than projected by DBEDT.
At of the end of 2016, value of private building permits was down by 18.2 percent. Value of commercial and industrial permits decreased the most at 70 percent, while residential permits decreased by 12.3 percent. Value of additions and alterations decreased by 1.7 percent.
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 Hawaii visitor source countries – U.S., Canada, and Japan. The U.S. economy will expand 2.3 percent, Canadian economy will grow 1.9 percent, and Japanese economy will increase 1 percent 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 percent in 2017, and will slightly decrease to 1.6 percent by year 2020.
Non-agriculture payroll job count will grow by 1.2 percent in 2017, the same as projected in the previous quarter. Job growth is projected to be at 1.1 percent for the years after 2017.
DBEDT expects the unemployment rate will increase slightly in 2017 to 3.4 percent and will rise to 3.6 percent in 2020.
Nominal (no inflation adjustment) personal income is projected to grow at around 4.7 to 4.8 percent during the next few years, same as the projection in the previous quarter. According to the U.S. Bureau of Economic Analysis, Hawaii personal income grew by 4.5 percent during the first three quarters of 2016. DBEDT projects that real personal income will increase in the neighborhood of 2.5 percent in the next few years.
DBEDT lowered its projection on the consumer inflation rates to a range between 2.3 and 2.5 percent during the 2017-2020 period. The actual consumer inflation rate in 2016, as reported by the U.S. Bureau of Labor Statistics, was 2 percent, lower than the 2.3 percent 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 Hawaii’s economy as well as narrative explanations of the trends in these data.
The full report is available at: dbedt.hawaii.gov/economic/qser/.