Hawaii island recovery finally catching up, economist says

Growth in the state’s visitor industry is spreading to the economy on Hawaii island, one of the last areas in the state to recover from the recent recession, a top Hawaii economist said Thursday.

"Thanks to the statewide tourism boom, Hawaii island’s economic outlook is better than it has been in the last five years," economist Jack Suyderhoud said at the 39th annual First Hawaiian Bank Hawai‘i County Business Outlook Forum.

"Both sides of Hawaii island are experiencing economic expansion, though not all sectors are benefiting uniformly," said Suyderhoud, a First Hawaiian Bank adviser and professor of business economics at the University of Hawaii Shidler College of Business.

"The tourism boom will slow down, but its continued strength will spread through the rest of the economy. As economic activity increases there will be more self-sustaining growth and more opportunities for all of Hawaii island’s businesses and residents."

Although Hawaii island overall is not as dependent on tourism as Maui or Kauai, the industry does make a significant contribution to economic activity on the Kona Coast, Suyderhoud said.

Hawaii island’s monthly visitor arrival and spending numbers have been trending upward, but air seat capacity continues to be a concern, especially from Japan, Suyderhoud said.

Hawaii island welcomed 753,768 visitors through the first six months of 2013, up 5.8 percent from the same period in 2012, according to the latest data from the Hawaii Tourism Authority. Visitor spending totaled $980 million for the first six months, up 21 percent from the first six months of 2012.

Hawaii island’s job market is gaining momentum, but still has not fully recovered from the 2008-2009 recession, he said. The island lost 8,000 jobs between the pre-recession peak and the 2010-2011 trough.

"About 3,000 (jobs) have returned and unemployment has followed the statewide unemployment rate downward since mid-2011. However, the island’s rate is still 2 percentage points above the statewide average," Suyderhoud said.

The construction industry, as measured by building permits, has bottomed out and is moving higher, according to Suyderhoud. Contractors "seem more upbeat," he said.

Private-sector building permits were up 25 percent in early 2013 compared with a year earlier. Construction jobs are up 1,000 on a year-over-year basis. Single-family residential construction is leading the way, but there are also a number of government projects, such as Hawaii Community College’s $20 million Palamanui campus expansion and the $75 million widening of a section of the Queen Kaahumanu Highway.