DBEDT NEWS RELEASE: DBEDT Predicts Steady Economic GrowthPosted on Aug 30, 2016 in Latest Department News
HONOLULU – The Department of Business, Economic Development and Tourism (DBEDT) released its third quarter 2016 Statistical and Economic Report, where the data shows Hawaii’s economy continues to expand.
“We are pleased to see that our labor market condition is still among the best in the nation,” said DBEDT Director Luis P. Salaveria. “Through July of this year, our labor force, employment, and payroll job count are at record high levels, and our unemployment rate was fourth lowest in the nation during the first seven months of this year.”
DBEDT expects that Hawaii’s economic growth, as measured by the growth of real gross domestic product (GDP), will grow steadily at 1.9 percent for 2016 and around 2 percent for next few years. The 2016 economic growth rate is higher than the U.S. economic growth rate of 1.5 percent for 2016, as forecasted by the 50 top economic forecast organizations and published in Blue Chip Economic Indicators. For 2017, the U.S. economic growth rate was projected to be 2.2 percent, higher than the Hawaii economic growth rate of 1.9 percent.
“Construction jobs reached 40,000 in the second quarter of 2016, the same level as the fourth quarter of 2007, when construction was at its previous peak level,” said Chief State Economist Eugene Tian. “Due to the labor constraint, building permit applications slowed during the first quarter of 2016, but the value of authorized building permits increased during the second quarter of 2016. We expect the value of building permits will pick up more during the second half of the year.”
Construction payroll jobs increased by 19 percent during the first half of 2016, as compared with the same period in 2015. During the first half of 2016, a total of 13,600 non-agricultural payroll jobs were added in the economy, representing a 2.1 percent increase. Almost all the industries added jobs except wholesale trade and state government, which experienced job losses. Gains in construction jobs (6,300 jobs) accounted for more than 46 percent of the total job gains in the state.
Hawaii’s unemployment rate during the first seven months of 2016 averaged at 3.3 percent, 0.5 percentage points lower than the same period in 2015 and ranked Hawaii the fourth lowest in the nation. Honolulu’s unemployment rate was the lowest among the counties at 3.1 percent, followed by Maui County at 3.4 percent, Kauai at 3.6 percent and Hawaii County at 4.2 percent during the first seven months of 2016.
With 687,100 people in the civilian labor force and 664,450 people employed during the first seven months of 2016, the numbers show historical high levels for Hawaii. Civilian non-agriculture payroll job count was also at a historical high level at 647,200 during the first seven months of this year.
As of the week of Aug. 20, initial unemployment claims in 2016 decreased by 11.9 percent, from 1,392 claims per week in first half of 2015 to 1,226 claims per week in first half of 2016.
Visitor arrivals increased by 3.3 percent and visitor expenditures increased by 1.6 percent during the first seven months of 2016. With the appreciation of the Japanese Yen in recent month, spending by Japanese visitors is expected to increase during the second half of 2016.
With the data provided, DBEDT expects that the payroll job count will grow by 1.8 percent in 2016, the same as projected in the previous quarter. Job growth is projected to be at the 1.1 to 1.2 percent for the years after 2016.
DBEDT expects the unemployment rate will drop to 3.2 percent in 2016 and will rise to 3.6 percent in 2019.
DBEDT expects that visitor arrivals will reach 8.8 million in 2016, a 1.9 percent increase from 2015. Visitor spending is projected to increase by 3.2 percent to $15.6 billion. Visitor projections are based on the final data from the Hawaii Tourism Authority. The percentage changes are different from DBEDT’s previous quarter projections, but the absolute numbers are about the same as those projected in the previous quarter. Visitor arrivals growth in the next few years will be stabilized in a range between 1.7 to 1.8 percent.
Nominal (no inflation adjustment) personal income is projected to grow at 4.8 percent in 2016, same as the projection in previous quarter. According to the U.S. Bureau of Economic Analysis, Hawaii personal income grew by 4.8 percent in 2015. With a lower inflation rate caused by the lower oil price, Hawaii consumers benefited from a stronger purchasing power from income. DBEDT estimated that real personal income increased by 4 percent in 2015 and will increase by 2.8 percent in 2016.
DBEDT revised its projection for the consumer inflation rate up to 2.3 percent for 2016. First half consumer inflation for Honolulu was 2.4 percent according the data released by the U.S. Bureau of Labor Statistics.
The DBEDT Quarterly Statistical and Economic Report contains more than 100 tables of the most recent quarterly data on Hawaii’s economy as well as narrative explanations of the trends in these data.
The full report is available at: dbedt.hawaii.gov/economic/qser/.
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Department of Business, Economic Development and Tourism
Phone: (808) 587-9006
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Email: [email protected]