Hawaii Economic Condition Remains Stable

Posted on Nov 14, 2014 in News

For Immediate Release: November 14, 2014
DBEDT News Release 14-07

HONOLULU—In its fourth quarter 2014 statistics and economic report, the Department of Business, Economic Development and Tourism (DBEDT) kept Hawaii economic growth unchanged from its previous quarter forecast.

“Hawaii’s economic conditions remain unchanged from our third quarter forecast, the fundamentals are strong with steady growth and we expect this to continue into 2015,” said DBEDT Director Richard C. Lim. “Our labor market remains robust, with unemployment being the 7th lowest in the nation and employment levels reaching an historic high during the first nine months of the year. Visitor arrivals are on track to set another record year in 2014. The value of building permits increased 15.9 percent as of September, indicating a good year for construction next year.”

Visitors from the U.S. Western States increased 4.4 percent during the 3rd quarter of 2014, reversing the declining trend started a year ago. Year-to-date, Chinese visitors increased by 27.4 percent and Korean visitors increased 17.8 percent. Japanese visitors continue to come to the state, but stayed shorter than before, resulting in a decrease in total spending by this visitor group. Overall visitor spending has increased 2 percent during the first three quarters of 2014. According to airline schedules, air seats will increase by 5.4 percent during the last quarter of the year, and will increase by 6.1 percent in January of 2015.

DBEDT revised the visitor arrival forecast slightly upwards from its previous forecast. Visitors arriving by air is expected to increase by 1.4 percent in 2014, but visitors arriving by cruise ships will decrease by 26.8 percent. The combined result is projected to be a total arrival growth of 0.8 percent for 2014, slightly higher than the previous forecast of 0.7 percent.

According to data collected by DBEDT, the passenger count in October increased 6.8 percent, indicating that the number of visitor arrivals this October is larger than the previous October.

Future visitor growth is expected to come from the Other Asia market, which consists of visitors from China and Korea. Chinese and Korean visitor arrivals will be growing at double digits for the next few years. The announcement of a Chinese tourist and business visa extension by President Obama in Beijing on Nov. 10, during the APEC conference, will further boost Chinese visitors to Hawaii and the U.S. DBEDT expects that Chinese visitors to Hawaii will reach 159,000 this year and 200,000 in 2015.

Through September of this year, non-agricultural payroll jobs increased by 7,500, or 1.2 percent, compared with the same period of last year. DBEDT expects non-agricultural payroll jobs will increase by 1.3 percent for 2014, slightly higher than the 1.2 percent projected previously.

Though the construction sector is currently performing below expectation, the value of building permits increased 15.9 percent during the first nine months of 2014, indicating a busier year in 2015. With the major government projects such as the Honolulu rail, the Honolulu Water Supply sewage treatment facilities, and the approved private projects, more projects will be in the process of applying for building permits in the coming months. The construction industry is still on its way to be the leading industry for economic growth.

DBEDT kept the consumer inflation rate and the unemployment rate unchanged from the previous quarter forecast. The consumer inflation rate, as measured by the Honolulu Consumer Price Index for Urban Consumers (CPI-U), is expected to grow by 1.5 percent in 2014, 2.2 percent in 2015, and gradually increase to 3.2 percent by 2017. The unemployment rate will drop to 4.4 percent in 2014, 4.1 percent in 2015, and below 4 percent thereafter. The unemployment rate for the first nine months of 2014 was 4.4 percent, DBEDT expects that the labor market will remain stable during the last quarter of the year.

Due to lower consumer inflation, Hawaii’s real personal income growth is projected to be 2.6 percent in 2014, the same as the previous forecast. This is the highest real personal income growth rate since 2006. For 2015 and beyond, DBEDT expects that the real personal income growth will be at or above 2.0 percent, which is also the same as the previous forecast.

Real Gross Domestic Product (GDP), the value of final goods and services produced as measured by constant 2009 dollars, is expected to grow by 2.6 percent for 2014, the same as the previous projection. This growth rate is higher than the U.S. economic growth rate, which is projected to grow by 2.2 percent for 2014. For 2015, DBEDT expects that Hawaii’s economy will grow at 2.8 percent, slightly lower than the 3.0 percent growth rate for the U.S. economy, which is the average of 50 leading economic forecasting organizations.

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. The full report is available at: dbedt.hawaii.gov/economic/qser.

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ACTUAL AND FORECAST OF KEY ECONOMIC INDICATORS FOR HAWAII: 2012 TO 2017
Economic Indicators 2012 2013 2014 2015 2016 2017
Actual Forecast
Total population (thousands) 1,390 1,404 1,418 1,432 1,447 1,461
Visitor arrivals (thousands) ¹ 8,029 8,174 8,237 8,395 8,556 8,714
Visitor days (thousands) ¹ 74,519 74,942 75,130 76,801 78,238 79,662
Visitor expenditures (million dollars) ¹ 14,365 14,521 14,913 15,456 16,164 16,838
Honolulu CPI-U (1982-84=100) 249.5 253.9 257.7 263.4 270.5 279.2
Personal income (million dollars) 61,968 63,468 66,007 68,977 72,288 75,903
Real personal income (millions of 2008$) ² 50,245 50,794 52,137 53,430 54,661 55,772
Non-agricultural wage & salary jobs (thousands) 606.3 617.6 625.6 635.0 643.9 652.3
Civilian unemployment rate 5.7 4.8 4.4 4.1 3.8 3.5
Gross domestic product (million dollars) ³ 72,512 75,235 78,513 82,365 86,240 90,032
Real gross domestic product (millions of 2009$) ³ 68,825 70,110 71,941 73,956 75,805 77,472
Gross domestic product deflator (2009=100) ³ 105.4 107.3 109.1 111.4 113.8 116.2
Annual Percentage Change
Total population 1.0 1.0 1.0 1.0 1.0 1.0
Visitor arrivals ¹ 10.0 1.8 0.8 1.9 1.9 1.9
Visitor days ¹ 8.8 0.6 0.3 2.2 1.9 1.8
Visitor expenditures ¹ 17.9 1.1 2.7 3.6 4.6 4.2
Honolulu CPI-U 2.4 1.8 1.5 2.2 2.7 3.2
Personal income 4.7 2.4 4.0 4.5 4.8 5.0
Real personal income ² 1.4 1.1 2.6 2.5 2.3 2.0
Non-agricultural wage & salary jobs 2.2 1.9 1.3 1.5 1.4 1.3
Civilian unemployment rate -0.8 -0.9 -0.4 -0.3 -0.3 -0.3
Gross domestic product ³ 4.0 3.8 4.4 4.9 4.7 4.4
Real gross domestic product ³ 1.7 1.9 2.6 2.8 2.5 2.2
Gross domestic product deflator (2009=100) ³ 2.2 1.9 1.7 2.1 2.2 2.2

1/ Visitors who came to Hawaii by air or by cruise ship.
2/ Using personal income deflator developed by the U.S. Bureau of Economic Analysis.
3/ 2014 and later years are estimated by DBEDT, data for earlier years from U.S. Bureau of Economic Analysis.
Source: Hawaii State Department of Business, Economic Development & Tourism, November 12, 2014.