State of the Economy

1st Quarter 2019 Report

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Hawaii’s major economic indicators were mostly positive in the fourth quarter of 2018. Visitor arrivals, State general fund tax revenues, wage and salary jobs, personal income (through the third quarter of 2017), private building authorizations, and government contracts awarded all increased in the quarter compared to fourth quarter 2017. Only visitor expenditures decreased in the quarter.

In the fourth quarter of 2018, the total number of visitors arriving by air to Hawaii increased 84,688 or 3.6 percent. Due to shorter lengths of stay, the daily visitor census increased 2.0 percent in the quarter. Since visitors spent less on a daily basis in the fourth quarter of 2018, total visitors by air spending decreased 1.7 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 has shown positive growth compared with the same quarter in the previous year.

In the fourth quarter of 2018, jobs in the construction sector decreased 3.8 percent or 1,400 jobs, the government contracts awarded increased $326.3 million or 335.2 percent, and the permit value for private construction increased $43.4 million or 6.5 percent, compared with the same quarter of 2017. According to the most recent excise tax base data available, current construction put-in-place increased $315.4 million or 14.3 percent in the third quarter of 2018, compared with that quarter in 2017.

In the fourth quarter of 2018, State general fund tax revenues were up $132.9 million or 8.7 percent over the same period of 2017. Net individual income tax revenues increased $6.9 million or 1.2 percent, and State general excise tax revenue increased $51.6 million or 6.5 percent in the fourth quarter of 2018, compared to fourth quarter 2017. In 2018, State general fund tax revenues increased $450.2 million or 6.9 percent, and state general excise tax revenue increased $76.7 million or 2.3 percent, compared to the previous year.

Labor market conditions were mainly positive. Hawaii’s jobs increased for the 33rd consecutive quarter beginning in fourth quarter 2010. In the fourth quarter of 2018, Hawaii’s non-agricultural wage and salary jobs averaged 671,600 jobs, an increase of 10,600 jobs or 1.6 percent from the same quarter of 2017.
The job growth in the fourth quarter of 2018 was due to job increases in both the private sector and the government sector. In this quarter, the private sector added about 9,300 non-agricultural jobs compared to the fourth quarter of 2017. Jobs increased the most in Professional & Business Services, adding 3,800 jobs or 4.6 percent. This was followed by Food Services and Drinking Places, adding 2,900 jobs or 4.1 percent, Financial Activities, adding 1,800 jobs or 6.3 percent, and Health Care & Social Assistance, adding 1,000 jobs or 1.4 percent in the quarter. Natural Resources, Mining & Construction lost 1,400 jobs, Accommodation last 600 jobs, and Manufacturing lost 300 jobs in the quarter. The three levels of government added 1,300 jobs or 1.0 percent in the fourth quarter of 2018 compared to the same quarter of 2017. The Federal Government lost 100 jobs or 0.3 percent; State Government added 1,200 jobs or 1.6 percent, and Local Government added 200 jobs or 1.1 percent, compared to the fourth quarter of 2017.

In the third quarter of 2018, total annualized nominal GDP increased $3,221 million or 3.6 percent, from the third quarter of 2017. In the first three quarters of 2018, total annualized nominal GDP increased $2,770 million or 3.1 percent from the same period of the previous year. In the third quarter of 2018, total annualized real GDP (in chained 2012 dollars) increased $966 million or 1.2 percent from the third quarter of 2017. In the first three quarters of 2018, total annualized real GDP increased $581 million or 0.7 percent from the same period of the previous year.

In the third quarter of 2018, total non-farm private sector annualized earnings increased $1,195.8 million or 2.1 percent from the third quarter of 2017. In dollar terms, the largest increase occurred in Accommodation and Food Services; followed by Information, Professional, Scientific, & Technical Services, Retail Trade, and Administrative & Waste Management Services. During the third quarter of 2018, Total Government Earnings increased $285.0 million or 1.9 percent from the same quarter of 2017. Earnings from the Federal Government increased $205.7 million or 3.4 percent. Earnings from State and Local Governments decreased $0.7 million in the quarter.

In the second half of 2018, Honolulu’s Consumer Price Index for Urban Consumers (CPI-U) increased 2.1 percent from the same period in 2017. This is 0.3 of a percentage point below the 2.4 percent increase for the U.S. average CPI-U and is lower than the second half of 2017 Honolulu CPI-U increase of 2.5 percent from the same period of the previous year. In the second half of 2018, the Honolulu CPI-U increased the most in Transportation (4.9 percent), followed by Recreation (3.7 percent), Housing (2.4 percent), Other Goods and Services (1.7 percent), and Food and Beverages (1.2 percent). The price of Education and Communication decreased 0.6 percent and the price of Apparel decreased 6.7 percent compared to the second half of 2017.