Retail and tourism sectors rise but the construction industry "has yet to turn the corner"
POSTED: 1:30 a.m. HST, Jul 14, 2011
LAST UPDATED: 2:26 p.m. HST, Aug 5, 2011
Consumers pulled out their credit and debit cards more liberally last quarter and increased spending at Hawaii hotels and restaurants as the tourism-led recovery continued to gain traction.
Credit card sales at businesses open at least a year rose 8 percent over the same period a year ago, according to a second-quarter business activity report released today by First Hawaiian Bank, the state's largest local card processor of merchant services. The increase follows first-quarter growth of 10.7 percent over the year-earlier period.
While the report showed year-over-year gains in 14 of the 16 sectors it tracks, it doesn't include the lagging construction sector since credit and debit cards aren't typically used in that industry.
"We continue to be encouraged by the positive trends in both our tourism and retail sectors," First Hawaiian President Bob Harrison said. "However, our recovery continues to be fragile and is unfortunately, to date, a jobless recovery. This is, in part, due to the continued weakness of our construction segment."
Convenience stores showed the largest percentage increase in transaction volume with a 19.4 percent gain to $14.9 million. Hotels had the second-largest increase at 15.1 percent and accounted for the highest transaction volume at $149.9 million.
First Hawaiian CEO Don Horner said the growth in the hotel sector for the quarter reflects the strength of the tourism industry, which has continued to gain market share.
"The numbers include not only an increase in the visitor count but also an increase in the average room rate," he said. "Our hotels were able to not only improve volume but also improve margin, which translates into an important increase in the transient accommodations tax, which helps fund our public sector."
Visitor arrivals through May were up 6.7 percent to 2.8 million and visitor spending was ahead 15.3 percent at $4.3 billion. Statewide hotel occupancy for the same period was up 4.7 percentage points to 73.2 percent while the average daily room rate grew 9.0 percent to $188.21.
Restaurants had the second-highest transaction volume at $98 million even though it was up just 8.2 percent from a year earlier.
Home furnishings, which slipped 0.8 percent in transaction volume to $22.7 million, and travel agencies, off 25.6 percent to $25.1 million, were the only sectors that had deceased spending from the year-earlier period.
"The decrease in home furnishings is a reflection of the slower real estate market while travel, which includes outbound, is down because more people are staying home," Horner said.
Construction, though, continues to be a major drag on Hawaii's recovery.
In the first quarter, residential building permits plunged 37.7 percent, construction permits declined 16.4 percent, commercial and industrial permits were down 9.5 percent and government contracts were off 9.2 percent, according to the most recent data from the state Department of Business, Economic Development & Tourism.
And construction jobs are also lagging despite the state unemployment rate in May falling to 6 percent, matching its lowest level since January 2009, according to the state Department of Labor and Industrial Relations.
Through the first five months of this year, not-seasonally-adjusted construction jobs were down 2.3 percent to 140,800 from 144,100 during the same period a year ago, according to the Labor Department.
"Construction has yet to turn the corner in the recovery from the recession," First Hawaiian economic adviser Leroy Laney said. "That's the lagging sector of the economy."
First Hawaiian, the largest bank in the state with $15.2 billion in assets at the end of the first quarter, processed more than $1.8 billion worth of credit and debit card sales transactions during the first half of this year, a 10.9 percent increase over the same period a year ago.
The bank has more than 7,500 merchant locations throughout Hawaii, Guam and the Commonwealth of the Northern Mariana Islands.