Retail spending continued to increase in Hawaii during the first three months of the year despite a slowdown in visitor arrivals after the March 11 earthquake and tsunami in Japan.

Consumers spent 10.2 percent more in the quarter than they did a year ago, according to First Hawaiian Bank’s business activity report released yesterday.

"Each month during the quarter showed an increase over the previous year," said Keith Na­gata, senior vice president for First Hawaiian. "This underscores the strength of Hawaii’s economic recovery."

First Hawaiian, the largest bank in the state with $15.2 billion in assets, proc­essed more than $3.8 billion worth of credit and debit card sales transactions in 2010 when retail spending rose 6.4 percent.

Nagata said early signs of the economic impact stemming from the disasters in Japan "do not appear to be as severe as first anticipated."

However, First Hawaiian Bank consultant Leroy Laney cautioned that the second quarter is likely to show the biggest effect.

"We need to watch the second quarter to see the impact of the Japan situation, and it obviously will come from the tourism sector," Laney said.

The Hawaii Tourism Authority said recently it expects visitor traffic from Japan to drop 45 percent in April, 35 percent in May and 30 percent in June.

The HTA, which hasn’t released its final numbers yet for March, was expecting an 18.3 percent drop-off in Japan arrivals for that month.

Laney, though, is still upbeat about the state’s recovery.

"I don’t think (the Japan situation) will derail the recovery here," he said. "The mainland tourism side is continuing to show a recovery, and if we could get some help from the construction side, which we would get if rail transit comes along, that will add to tourism’s support."

Consumers opened their wallets the most last quarter for travel activities with spending jumping 17.7 percent to $34.8 million from $29.6 million in the year-earlier period, according to yesterday’s report.

Convenience stores showed the second-highest increase, up 17.2 percent to $14.7 million; followed by shipping, up 16.6 percent to $11.1 million; automotive, up 14.9 percent to $30.5 million; and hotels, up 14.7 percent to $181.8 billion.

Only two sectors showed quarterly declines: insurance, off 0.8 percent, and travel agencies, down 13.4 percent.

First Hawaiian, the state’s largest provider of merchant card terminals and debit and credit card proc­ess­ing, has more than 7,500 merchant locations in Hawaii, Guam and the Commonwealth of the Northern Mari­ana Islands. The business activity report measured "same store sales," or sales activity at businesses open at least a year.