State of the Economy

3rd Quarter 2019 Report

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Hawaii’s major economic indicators were mixed in the second quarter of 2019. Visitor arrivals, wage and salary jobs, personal income (through the first quarter of 2019), and State general fund tax revenues increased in the quarter compared to the second quarter of 2018. However, visitor expenditures, private building authorizations, and government contracts awarded decreased in the quarter.

In the second quarter of 2019, the total number of visitors arriving by air to Hawaii increased 134,220 or 5.4 percent. Due to shorter lengths of stay, the daily visitor census increased 2.4 percent in the quarter. Since visitors spent less on a daily basis in the second quarter of 2019, 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 second quarter of 2019, jobs in the construction sector increased 2.5 percent or 900 jobs, the government contracts awarded decreased $469.3 million or 78.4 percent, and the permit value for private construction decreased $299.6 million or 27.0 percent, compared with the same quarter of 2018. According to the most recent excise tax base data available, current construction put-in-place increased $146.8 million or 6.7 percent in the first quarter of 2019, compared with that quarter in 2018.

In the second quarter of 2019, State general fund tax revenues were up $229.4.9 million or 12.3 percent over the same period of 2018. State general excise tax revenue increased $157.6 million or 21.3 percent, net corporate income tax revenues increased $46.5 million or 137.9 percent, net individual income tax revenues increased $22.0 million or 2.5 percent. Only transient accommodations tax (TAT) decreased $2.3 million or 1.5 percent in the second quarter of 2019, compared to same quarter 2018. In the first half of 2019, State general fund tax revenues increased $206.8 million or 5.8 percent, and state general excise tax revenue increased $114.9 million or 6.8 percent, compared to the same period of the previous year.

Labor market conditions were mostly positive. Hawaii’s jobs increased for the 35th consecutive quarter beginning in fourth quarter 2010. In the second quarter of 2019, Hawaii’s non-agricultural wage and salary jobs averaged 660,000 jobs, an increase of 3,100 jobs or 0.5 percent from the same quarter of 2018.

The job growth in the second quarter of 2019 was due to job increases in both the private sector and the government sector. In this quarter, the private sector added about 1,300 non-agricultural jobs compared to the second quarter of 2018. Jobs increased the most in Food Services and Drinking Places, adding 1,500 jobs or 2.2 percent; followed by Natural Resources, Mining & Construction, adding 900 jobs or 2.5 percent, Professional & Business Services, adding 800 jobs or 1.0 percent, Other services, adding 600 jobs or 2.2 percent, and Health Care & Social Assistance, adding 500 jobs or 0.7 percent in the quarter. In the second quarter of 2019, Retail Trade lost 2,200 jobs, and Manufacturing lost 400 jobs. The three levels of government added 1,800 jobs or 1.4 percent in the second quarter of 2019 compared to the same quarter of 2018. The Federal Government added 300 jobs or 0.9 percent; State Government added 1,400 jobs or 1.9 percent, and Local Government added 100 jobs or 0.5 percent, compared to the second quarter of 2018.

In the first quarter of 2019, total annualized nominal GDP increased $3,798 million or 4.2 percent, from the first quarter of 2018. In 2018, total annualized nominal GDP increased $2,984 million or 3.4 percent from the previous year. In the first quarter of 2019, total annualized real GDP (in chained 2012 dollars) increased $1,278 million or 1.6 percent from the first quarter of 2018. In 2018, total annualized real GDP increased $801 million or 1.0 percent from the previous year.

In the first quarter of 2019, total non-farm private sector annualized earnings increased $991.5 million or 2.6 percent from the first quarter of 2018. In dollar terms, the largest increase occurred in health care and social assistance; followed by administrative & waste management services, information, accommodation and food services, and retail trade. During the first quarter of 2019, total government earnings increased $519.1 million or 3.4 percent from the same quarter of 2018. Earnings from the federal government increased $367.7 million or 4.3 percent. Earnings from the state and local governments increased $151.3 million or 2.2 percent in the quarter.

In the first half of 2019, Honolulu’s Consumer Price Index for Urban Consumers (CPI-U) increased 2.0 percent from the same period in 2018. This is 0.3 of a percentage point above the 1.7 percent increase for the U.S. average CPI-U but is lower than the second half of 2018 Honolulu CPI-U increase of 2.1 percent from the same period of the previous year. In the first half of 2019, the Honolulu CPI-U increased the most in Recreation (4.2 percent), followed by Housing (3.0 percent), Food and Beverages (2.4 percent), Education and Communication (1.8 percent), and Other Goods and Services (0.8 percent). The price of Apparel decreased 2.8 percent and the price of Transportation decreased 1.3 percent compared to the first half of 2018.