State of the Economy

4th Quarter 2018 Report

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

In the third quarter of 2018, the total number of visitors arriving by air to Hawaii increased 99,390 or 4.1 percent. Due to longer lengths of stay, the daily visitor census increased 5.0 percent in the quarter. Since visitors spent less on a daily basis in the third quarter of 2018, total visitors by air spending increased 4.4 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 third quarter of 2018, jobs in the construction sector increased 0.6 percent or 200 jobs, the government contracts awarded decreased $250.3 million or 38.8 percent, the permit value for private construction increased $20.9 million or 2.9 percent, and State CIP expenditures increased $46.5 million or 12.3 percent, compared with the same quarter of 2017. According to the most recent excise tax base data available, current construction put-in-place increased $31.9 million or 1.5 percent in the first quarter of 2018, compared with that quarter in 2017.

In the third quarter of 2018, State general fund tax revenues were up $6.2 million or 0.4 percent over the same period of 2017. Net individual income tax revenues increased $67.5 million or 12.4 percent, and State general excise tax revenue decreased $20.7 million or 2.3 percent in the third quarter of 2018, compared to third quarter 2017. In the first three quarters of 2018, State general fund tax revenues increased $317.3 million or 6.4 percent, and state general excise tax revenue increased $25.1 million or 1.0 percent, compared to the same period of the previous year.

Labor market conditions were mainly positive. Hawaii’s jobs increased for the 32nd consecutive quarter beginning in fourth quarter 2010. In the third quarter of 2018, Hawaii’s non-agricultural wage and salary jobs averaged 658,800 jobs, an increase of 12,700 jobs or 2.0 percent from the same quarter of 2017.

The job growth in the third quarter of 2018 was due to job increases in both the private sector and the government sector. In this quarter, jobs increased the most in Food Services and Drinking Places, adding 4,500 jobs or 6.5 percent. This was followed by Professional & Business Services, adding 2,100 jobs or 2.6 percent, Financial Activities, adding 1,500 jobs or 5.3 percent, Health Care & Social Assistance, adding 1,500 jobs or 2.1 percent, and Transportation, Warehousing, and Utilities, adding 700 jobs or 2.1 percent in the quarter. In the third quarter of 2018, Manufacturing lost 500 jobs, and Information lost 400 jobs in the quarter. The three levels of government added 1,500 jobs or 1.3 percent in the third quarter of 2018 compared to the same quarter of 2017. The Federal Government added 100 jobs or 0.3 percent; State Government added 1,100 jobs or 1.7 percent, and Local Government added 300 jobs or 1.6 percent, compared to the third quarter of 2017.

In the second quarter of 2018, total annualized nominal GDP increased $3,021 million or 3.4 percent, from the second quarter of 2017. In the first half of 2018, total annualized nominal GDP increased $2,545 million or 2.9 percent from the same period of the previous year. In the second quarter of 2018, total annualized real GDP (in chained 2012 dollars) increased $755 million or 1.0 percent from the second quarter of 2017. In the first half of 2018, total annualized real GDP increased $389 million or 0.5 percent from the same period of the previous year.

In the second quarter of 2018, total non-farm private sector annualized earnings increased $1,578.4 million or 4.2 percent from the second quarter of 2017. In dollar terms, the largest increase occurred in health care and social assistance; followed by accommodation and food services, retail trade, professional, scientific, & technical services, and construction. During the second quarter of 2018, total government earnings increased $18.3 million or 0.1 percent from the same quarter of 2017. Earnings from the federal government increased $109.1 million or 1.3 percent. Earnings from the state and local governments decreased $90.8 million or 1.3 percent in the quarter.

In the first half of 2018, Honolulu’s Consumer Price Index for Urban Consumers (CPI-U) increased 1.6 percent from the same period in 2017. This is 0.9 of a percentage point below the 2.5 percent increase for the U.S. average CPI-U and is lower than the first half of 2017 Honolulu CPI-U increase of 2.5 percent from the same period of the previous year. In the first half of 2018, the Honolulu CPI-U increased the most in Transportation Housing (4.3 percent), followed by Food and Beverages (2.1 percent), Housing (1.8 percent), Other Goods and Services (1.7 percent), and Recreation (0.9 percent). The price of Education and Communication decreased 2.5 percent and the price of Apparel decreased 2.8 percent compared to the first half of 2017.