State More Optimistic on Economic Growth in 2014
Posted on Dec 4, 2013 in News
For Immediate Release: December 4, 2013
DBEDT News Release 13-11
HONOLULU—In its fourth quarter 2013 economic report, the Department of Business, Economic Development & Tourism (DBEDT) forecasts a higher economic growth rate for 2014 even while lowering the 2013 growth rate mainly due to slowing tourism activity in recent months.
“Our labor market is healthy; we have the 5th lowest unemployment rate in the nation,” said DBEDT Director Richard C. Lim. “The construction industry is strong thanks in part to growth in the urban core and should offset slower growth in the tourism sector next year.”
Economic conditions during the first 10 months have been healthy. The unemployment rate (not seasonally adjusted) dropped to 4.8 percent during the first 10 months of 2013 from 6.0 percent a year ago. Private businesses added 9,500 jobs to their payroll, resulting in a 1.3 percent growth in total non-agriculture wage and salary jobs.
The construction sector gained the most jobs with 2,750 more jobs in the first 10 months of 2013 than a year earlier, followed by jobs in the other services sector at 1,550 jobs, food services and drinking places added 1,500 jobs, the health care sector saw a 1,050 jobs increase, and professional and business services gained 850 jobs.
Federal civilian jobs marked the largest job loss at 1,050 during the first 10 months of 2013.
The value of private building permits increased 7.5 percent during the first nine months of 2013 from the same period a year ago, while the value of residential building permits increased 35.1 percent, and commercial and industrial permit increased by 17.2 percent. Additions and alterations decreased by 8.9 percent largely due to the changes in administrative rules for the solar tax credit.
The contracting tax base, which is an indicator for construction completed, increased by 16.7 percent during the first half of 2013.
Although visitor arrivals and visitor expenditures declined in recent months, it is likely that the visitor industry will still make a record year in 2013 in terms of arrivals and nominal expenditures. Visitor arrivals increased 3.9 percent and visitor expenditures increased 3.4 percent during the first ten months of 2013.
Due to the decline in visitor arrivals and expenditures since September, 2013, DBEDT projects that overall visitor arrivals will increase by 2.9 percent for 2013, lower than its previous forecast. Total visitor spending is now projected to increase 3.0 percent in 2013, 2.3 percent below the previous forecast. The forecast for the growth of visitor days in 2013 decreased from 2.7 percent to 1.5 percent.
The decline in visitor arrivals and expenditures in recent months can be attributed to the federal government shut down in October of this year and the depreciation of the Japanese Yen. The record-high hotel room rate in Hawaii is also a factor in visitors’ choosing competitive destinations.
The current forecast for 2013 real gross domestic product for Hawaii is a 2.4 percent growth, lower than the 2.6 percent forecasted last quarter. However, real GDP growth in 2014 is now forecasted to grow 2.8 percent, higher than the 2.4 percent previously forecasted.
DBEDT expects the Honolulu Consumer Price Index (CPI), a proxy for inflation, to rise 1.7 percent in 2013 – 0.2 of a percentage point below the previous forecast. The Honolulu consumer inflation rate was 1.8 percent during the first half of 2013.
Real personal income growth in 2014 is currently forecasted to be 3.3 percent, higher than the previous forecast. The civilian unemployment rate is projected to be 4.2 percent in 2014, lower than the previous forecast of 4.5 percent.
The forecast for 2014 visitor arrivals decreased from 3.0 percent to 2.7 percent in the current forecast. As of November 2013, scheduled air seats will increase by 0.7 percent for 2014, lower than previously expected. The forecast for visitor spending in 2014 is a decrease from 5.0 percent forecasted three months ago to 4.0 percent in the current forecast.
The number of non-agricultural wage and salary jobs in Hawaii is now expected to increase 1.3 percent in 2013, 0.5 of a percentage point lower than that projected in the previous forecast. Non-agricultural wage and salary jobs is expected to grow 1.8 percent in 2014, same as previously forecasted.
In the current forecast, Hawaii’s civilian unemployment rate is projected to decrease from 5.8 percent in 2012 to 4.6 percent in 2013.
Current dollar personal income growth in 2014 is now expected to growth at 5.5 percent in 2014, higher than the projection made in previous quarter. The real personal income growth rate forecast in 2014 also increased from 2.9 percent projected last quarter to 3.3 percent in the current quarter due to the increase in wage rate and the lower-than-expected inflation rate.
The DBEDT Quarterly Statistical and Economic Report contains more than 100 tables of the most recent quarterly data on Hawai‘i’s economy as well as narrative explanations of the trends in these data. The full report is available at: dbedt.hawaii.gov/economic/qser.
|Total population (thousands)||1,378||1,392||1,407||1,421||1,436||1,451|
|Visitor arrivals (thousands) ¹||7,299||8,029||8,265||8,486||8,680||8,863|
|Visitor days (thousands) ¹||68,467||74,519||75,650||77,734||79,522||81,201|
|Visitor expenditures (million dollars) ¹||12,180||14,365||14,790||15,405||16,176||16,946|
|Honolulu CPI-U (1982-84=100)||243.6||249.5||253.7||259.0||265.5||273.5|
|Personal income (million dollars)||60,095||62,330||64,823||68,388||72,013||75,973|
|Real personal income (millions of 2000$) ²||43,488||44,047||45,044||46,544||47,815||48,976|
|Non-agricultural wage & salary jobs (thousands)||594.0||605.3||613.2||624.2||634.8||644.3|
|Civilian unemployment rate||6.5||5.8||4.6||4.2||4.0||3.8|
|Gross domestic product (million dollars)||70,006||72,424||75,497||79,171||82,814||86,540|
|Real gross domestic product (millions of 2005$)||60,899||61,877||63,362||65,136||66,765||68,300|
|Gross domestic product deflator (2005=100)||115.0||117.0||119.2||121.5||124.0||126.7|
|Annual Percentage Change|
|Real personal income||2.0||1.3||2.3||3.3||2.7||2.4|
|Non-agricultural wage & salary jobs||1.2||1.9||1.3||1.8||1.7||1.5|
|Civilian unemployment rate ³||-0.3||-0.7||-1.2||-0.4||-0.2||-0.2|
|Gross domestic product||4.1||3.5||4.2||4.9||4.6||4.5|
|Real gross domestic product||2.1||1.6||2.4||2.8||2.5||2.3|
|Gross domestic product deflator (2005=100)||2.0||1.8||1.8||2.0||2.1||2.2|
1/ Visitors who came to Hawaii by air or by cruise ship.
2/ DBEDT calculated using BEA estimate of nominal personal income deflated by U.S. Bureau of Labor Statistics Honolulu CPI-U.
3/ Absolute change from previous year.
Source: Hawaii State Department of Business, Economic Development & Tourism, November 29, 2013.
For more information, contact:
Dave Young, DBEDT Research & Economic Analysis Division
Phone: (808) 586-2480