State of the Economy

3rd Quarter 2017 Report

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Hawaii’s major economic indicators were mixed in the second quarter of 2017. Visitor arrivals, visitor expenditures, State general fund tax revenues, wage and salary jobs, personal income (through the first quarter) increased, but private building authorizations, government contracts awarded and State CIP expenditures decreased in the quarter compared to the second quarter of 2016.

 In the second quarter of 2017, the total number of visitors arriving by air to Hawaii increased 125,054 or 5.7 percent.  Due to longer lengths of stay, the daily visitor census increased 5.8 percent in the quarter.  Since visitors spent more on a daily basis in the second quarter of 2017, total visitors by air spending increased 7.1 percent in the quarter.  Historical data shows that, after seventeen quarters of positive growth from the third quarter of 2009 to the third quarter of 2013, Hawaii’s tourism sector experienced one quarter of negative growth in the fourth quarter of 2013.  Since the first quarter of 2014, however, Hawaii’s tourism sector returned to positive growth compared with the same quarter in the previous year.

In the second quarter of 2017, the construction sector lost 300 jobs, the government contracts awarded decreased $92.7 million or 28.2 percent, the permit value for private construction decreased $139.1 million or 14.5 percent, and the State CIP expenditures decreased $152.1 million or 33.7 percent, compared with the same quarter of 2016.  According to the most recent excise tax base data available, current construction put-in-place increased $425.3 million or 24.4 percent in the first quarter of 2017, compared with that quarter in 2016.

In the second quarter of 2017, State general fund tax revenues were up $29.5 million or 1.8 percent over the same period of 2016.  State general excise tax revenue increased $19.9 million or 2.5 percent in the second quarter of 2017, compared to second quarter 2016.  In the first half of 2017, State general fund tax revenues increased $101.0 million or 3.2 percent, and state general excise tax revenue increased $33.5 million or 2.1 percent, compared to the same period of the previous year.

Labor market conditions were positive.  Since the fourth quarter of 2010, Hawaii’s jobs increased for the 26th consecutive quarter.  In the second quarter of 2017, Hawaii’s non-agricultural wage and salary jobs averaged 654,400 jobs, an increase of 8,800 jobs or 1.4 percent from the same quarter of 2016.

The job increase in the second quarter of 2017 was due to job increases in both the private sector and government sector. In this quarter, the private sector added about 8,000 non-agricultural jobs compared to the second
quarter of 2016.  Jobs increased the most in Food Services and Drinking Places, adding 2,800 jobs or 4.3 percent.  This was followed by Retail Trade, adding 1,000 jobs or 1.4 percent, Information, adding 2,700 jobs or 3.7 percent, and Accommodation, adding 1,000 jobs or 2.5 percent in the quarter.  For the private sector, Health Care & Social Assistance jobs had the largest decrease, losing 500 jobs or 0.7 percent; followed by Manufacturing, lost 400 jobs or 2.9 percent in the quarter.  The three levels of government added 800 jobs or 0.6 percent in the quarter.  The Federal Government added 200 jobs or 0.6 percent; the State Government added 700 jobs or 0.9 percent, while the Local Government lost 100 jobs or 0.5 percent.

The U.S. Bureau of Economic Analysis (BEA) estimates of quarterly GDP show, in the first quarter of 2017, total annualized nominal GDP increased $2,301 million or 2.8 percent from the first quarter of 2016.  In 2016, total annualized nominal GDP increased $3,317 million or 4.1 percent from the previous year.  In the first quarter of 2017, total annualized real GDP (in chained 2009 dollar) increased $636 million or 0.9 percent from the first quarter of 2016.  In 2016, total annualized real GDP increased $1,538 million or 2.1 percent from the previous year.

In the first quarter of 2017, total non-farm private sector annualized earnings increased $1,009.3 million or 2.9 percent from the first quarter of 2016.  In dollar terms, the largest increase occurred in accommodation and food services; followed by administrative and waste management services, professional, scientific & technical services, management of companies and enterprises, and retail trade.  During the first quarter of 2017, total government earnings increased $317.7 million or 2.0 percent from the same quarter of 2016.  Earnings from the federal government increased $187.0 million or 2.2 percent.  Earnings from the state and local governments increased $130.7 million or 1.8 percent in the quarter.

In the first half of 2017, Honolulu’s Consumer Price Index for Urban Consumers (CPI-U) increased 2.5 percent from the same period in 2016.  This is 0.3 of a percentage point above 2.2 percent increase for the U.S. average CPI-U and is higher than the 2016 Honolulu CPI-U increase of 2.0 percent from the previous year.  In the first half of 2017, the Honolulu CPI-U increased the most in Apparel (5.8 percent), followed by Housing (4.1 percent), Transportation (2.9 percent), Medical Care (1.5 percent), Other Goods and Services (1.3 percent), Food and Beverages (1.0 percent), and Recreation (1.0 percent).  The price of Education and Communication decreased 3.6 percent compared to the first half of 2016.