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The state is forecasting steady growth for Hawaii’s economy this year, with visitor spending expected to increase due to a stronger yen and the construction sector regaining momentum.
STABLE PROGRESS
The state’s forecast for year-over-year growth percentages through 2019:
|
2016 |
2017 |
2018 |
2019 |
| Visitor arrivals |
1.9 |
1.7 |
1.8 |
1.7 |
| Visitor spending |
3.2 |
3.4 |
4.1 |
4.1 |
| Payroll jobs |
1.8 |
1.2 |
1.1 |
1.1 |
| Unemployment rate* |
3.2 |
3.4 |
3.5 |
3.6 |
| Inflation rate |
2.3 |
2.2 |
2.3 |
2.4 |
| Personal income** |
2.8 |
2.6 |
2.6 |
2.5 |
| GDP** |
1.9 |
1.9 |
2.0 |
2.0 |
* Percentage of workforce
** Adjusted for inflation figures
Source: State Department of Business, Economic Development and Tourism
In its third-quarter forecast for 2016, the state Department of Business, Economic Development and Tourism said Tuesday it expects Hawaii’s economic growth, as measured by the inflation-adjusted gross domestic product, will grow steadily at 1.9 percent for 2016 and 2017 and at 2 percent for the subsequent two years.
Hawaii’s GDP — the broadest measure of economic output — is higher than the U.S. growth rate of 1.5 percent for 2016, as forecast by 50 top economic forecasting organizations. 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.
DBEDT sees visitor spending rising 3.2 percent to $15.6 billion and arrivals increasing 1.9 percent to 8.8 million this year. Both categories would mark a fifth straight year of records.
Spending by visitors from Japan, which is the state’s top international market, has been sluggish the last two years because of a weak yen. Even with the currency strengthening in 2016, Japan visitor spending is down 0.7 percent year to date through July with arrivals from that country up just 0.8 percent. The yen strengthened to 99.89 against the dollar Aug. 18 — the yen’s best level of the year — and traded at 102.98 Wednesday. The yen opened the year at 120.22 against the dollar.
The burgeoning construction sector also is expected to pick up again during the second half of the year.
“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,” chief state economist Eugene Tian said. “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.”
DBEDT projects overall payroll jobs to increase 1.8 percent this year on the strength of the construction sector, which realized a 19 percent bump in jobs during the first half of the year compared with the year-earlier period. There were 13,600 nonagricultural payroll jobs added to the economy during the first half of this year. That 2.1 percent increase accounted for gains in nearly all industries except for wholesale trade and state government. A gain of 6,300 construction 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 3.3 percent to rank as the fourth-lowest rate in the country and 0.5 percentage point lower than the same period in 2015. DBEDT forecasts the jobless rate to average 3.2 percent this year before rising to 3.4 percent in 2017, 3.5 percent in 2018 and 3.6 percent in 2019.
DBEDT projects the state’s inflation-adjusted, or real, personal income to rise 2.8 percent this year, while it expects the inflation rate to rise just 2.3 percent in 2016 and 2.2 percent in 2017 amid low oil prices.
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