Hawaii’s Economy Continues Strong Growth After a Great First QuarterPosted on May 18, 2016 in News
For Immediate Release: May 18, 2016
HONOLULU—The Department of Business, Economic Development and Tourism (DBEDT) released its second quarter 2016 Statistical and Economic Report, where the data shows Hawaii experienced a great first quarter of 2016.
“We are pleased to see that during the first quarter, total civilian labor force, civilian employment, and civilian non-agriculture payroll jobs were the highest quarterly numbers in Hawaii’s history,” said DBEDT Director Luis P. Salaveria. “With nearly 2.2 million visitor arrivals, first quarter 2016 was the second best quarter since visitor numbers were recorded.”
General excise tax (GET) revenue, an indicator of current economic activities, increased 4.6 percent in the first quarter this year. DBEDT expects that Hawaii’s economic growth, as measured by the growth of real gross domestic product (GDP), will continue the strong growth at 2.3 percent in 2016 and 2.4 percent in 2017, unchanged from the DBEDT February forecast. These growth rates are higher than the U.S. economic growth rates of 1.8 percent for 2016 and 2.3 percent for 2017, as forecasted by the 50 top economic forecast organizations and published in Blue Chip Economic Indicators.
“Hawaii experienced a record year in 2015 for the construction industry,” said Chief State Economist Eugene Tian. “The value of construction completed was $8.1 billion in 2015 and was historically the record high level in nominal terms.”
Construction activities accelerated during the first quarter of 2016 with construction jobs grew 20.4 percent during the quarter, which was the highest quarterly growth rate since 1990. During March 2016, there were 40,200 construction payroll workers working on construction projects in Hawaii, which was the historical record level in Hawaii’s history. With the completion of the Ala Moana Shopping Center renovation, the commercial and industrial construction activities will be slowing down this year.
During the first quarter of 2016, a total of 14,400 non-agriculture payroll jobs were added in the economy, representing a 2.3 percent increase. All the industries gained jobs except wholesale trade and state government. The construction industry contributed 46 percent of the total job gain with an increase of 6,600 jobs. Food services and drinking places added 2,700 jobs to its payroll. Healthcare and social assistance added 2,500 jobs, and professional and business services added 1,200 jobs. However, state government lost 700 jobs and wholesale trade lost 200 jobs during the first quarter of 2016 as compared with the same quarter a year ago.
Hawaii’s unemployment rate during the first quarter of 2016 remained the same as the fourth quarter of 2015 at 3.2 percent and was the lowest since 2007. Hawaii’s unemployment rate ranked the third lowest in the nation among all the states in the first quarter of 2016. Unemployment rates for all the counties in the state fell under 4 percent in first quarter of 2016. Honolulu’s unemployment rate was the lowest among the counties at 3 percent followed by Maui County at 3.4 percent, Kauai at 3.6 percent and Hawaii County at 3.8 percent.
With 688,800 people in the civilian labor force and 667,100 people employed during the first quarter of 2016, the numbers show historical high levels for Hawaii. Civilian non-agriculture payroll job count was also at historical high level at 647,200 during the first quarter of this year.
As of the week of May 7, initial unemployment claims in 2016 decreased by 17.4 percent, from 1,491 claims per week in first quarter 2015 to 1,232 claims per week in first quarter 2016.
Compared with the construction boom during the first quarter of 2015, value of private construction decreased by 58 percent during the first quarter of 2016. The biggest decrease was the permit value for commercial and industrial, which dropped by 92.1 percent. Value for residential permits decreased by 53.8 percent and value for additions and alterations decreased by 32.3 percent during the first quarter of 2016. In March 2016, the value of residential permit increased by 10.4 percent after three months of consecutive declines. Since there is a lag between the time a building permit is issued and the actual construction start, the slowing down in building permits during the first quarter this year will result in slow construction toward the end of 2016.
Visitor arrivals increased by 3.6 percent and visitor expenditures increased by 2.6 percent during the first quarter of 2016.
With the data provided, DBEDT expects the payroll job count will grow by 1.8 percent in 2016, higher than the 1.3 percent projected in the previous quarter. Job growth is projected to be at the 1.1 to 1.2 percent for the years after 2016.
DBEDT expects the unemployment rate will drop to 3.2 percent in 2016, lower than the 3.5 percent projected last quarter. The unemployment rate is expected to further drop to 3 percent in 2019.
DBEDT expects that visitor arrivals will reach 8.8 million in 2016, which would be a 2.2 percent increase from 2015. Visitor spending is now projected to increase by 2.5 percent, slightly up from the 2.4 percent projected in the previous quarter.
Scheduled air seats increased 0.5 percent in the first quarter of 2016, and are expected to increase at the same rate during the second quarter of this year. Visitor arrivals growth in the next few years will be stable, in a range between 1.7 to 1.8 percent.
Nominal (no inflation adjustment) personal income is projected to grow at 4.8 percent in 2016, same as the projection in previous quarter. According to the U.S. Bureau of Economic Analysis, Hawaii personal income grew by 4.6 in 2015. With a lower inflation rate caused by the lower oil price, Hawaii consumers benefited from a stronger purchasing power from income. DBEDT estimated that real personal income increased by 3.6 percent in 2015 and will increase by 3 percent in 2016. These real personal income growth rates are the same as those projected in the previous quarter.
DBEDT kept its projection for the consumer inflation rate at 2 percent for 2016 due to the continued expectation on low oil prices.
New in this report are the data on Hawaii home buyers by type of homes (single family or condominium), by place of buyer’s residence (local, U.S. mainlander, and foreign), and by county of property location. From 2008 to 2015, a total of 144,382 homes were sold or resold in the state. Of these, 72.7 percent were purchased by Hawaii residents, 23.3 percent were purchased by people residing on the U.S. mainland, and residents of foreign countries purchased 4 percent of these homes. Of these from changed owners, 47 percent were single family homes, along with 53 percent from condominiums.
The DBEDT Quarterly Statistical and Economic Report contains more than 100 tables of the most recent quarterly data on Hawaii’s economy as well as narrative explanations of the trends in these data.
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