Employers hold back on hiring as they await strengthened consumer spending
POSTED: 01:30 a.m. HST, Dec 17, 2010
Hawaii's unemployment rate remained at 6.4 percent in November for the fifth straight month, indicating a reluctance on the part of employers to undertake any significant hiring until they are convinced the economic recovery is firmly rooted.
Hawaii fared better than the nation as a whole, which experienced an increase in the jobless rate to 9.8 percent in November from 9.6 percent in October.
Nonetheless, the Hawaii job market has improvement only modestly since the recession officially ended in June 2009. Unemployment won't begin to fall appreciably until the economic recovery picks up steam, said Bill Boyd, a labor economist at University of Hawaii at West Oahu. And economic growth won't return to pre-recession levels until consumers reduce their debt loads and begin to spend more freely, he added.
"Businesses aren't expanding -- they're not investing or hiring because they see that consumer spending is only growing modestly. At some point people will start consuming again, but they have to first work through their debt," Boyd said.
Economic theory holds that the economy at the national level will need to grow faster than 3 percent a year when adjusted for inflation to make a dent in the jobless rate, Boyd said. Because of differences in Hawaii's labor market, Boyd estimates the economic growth rate here would only have to hit about 1.3 percent to achieve the same result.
Hawaii's economy, which contracted by an inflation-adjusted 1.5 percent last year, is expected to grow by 1.4 percent in 2011 and 1.8 percent in 2012, according to the latest forecast from the state Department of Business, Economic Development and Tourism.
The Hawaii and national unemployment rates, which are adjusted for seasonal variations, are derived from a telephone survey of households conducted by the national Bureau of Labor Statistics. Hawaii's labor force totaled 632,900 in November. That included 592,150 who were employed and 40,750 who were unemployed but looking for work.
A separate survey of Hawaii businesses showed that employers hired a net 1,200 workers in November.
The biggest increases in hiring were in the "leisure and hospitality" and the "professional and business services" sectors. Both increased their payrolls by 300 positions. The financial industry added another 200 jobs, according to the state Labor Department.
The category of "trade, transportation and utilities," which includes those employed in retail, lost 1,500 jobs. Positions in education and health services fell by 600, while the number of construction jobs fell by 200.
By county, Honolulu's unemployment rate was the lowest at 5.4 percent. The rate was 8.1 percent in Maui County, 8.7 percent in Kauai County and 9.7 percent in Hawaii County. The county data are not seasonally adjusted.