Kauai is outperforming other neighbor islands in terms of economic growth, led by strong gains in tourism, according to an economic forecast by local economist Leroy Laney.

While payroll jobs remain below pre-recession levels statewide, Kauai has surpassed all counties in job growth except for Oahu, Laney told business leaders Thursday in Poipu during a presentation sponsored by First Hawaiian Bank.

"Kauai’s economy, led by strong tourism gains, is demonstrating a somewhat more upbeat trend than other neighbor island counties," he said. "Its spirit of measured optimism prevails despite the very slow pace of recovery."

In addition to tourism, Kauai benefits from the presence of the Pacific Missile Range Facility — one of the island’s largest employers — and the diversification of its agriculture sector from sugar into seed corn and coffee, according to Laney.

On the tourism front, Kauai has been helped by an additional $1 million in marketing funds provided by the mayor and County Council. In addition, Alaska Airlines has added more direct flights from the mainland and now flies daily from the California cities of San Jose and Oakland. In addition, West Jet continues its seasonal direct flights from Vancouver.

"The snapback in Kauai tourism recently has been strong. Arrivals have been growing robustly, and visitor spending growth is even stronger," he said.

One of the reason’s Kauai’s job growth has been more robust than on the other neighbor islands is greater strength in its construction sector, Laney said. Going forward, construction jobs will get a boost when building begins on a super Safeway store at Hokulei Village. Permits for that project are now in process and construction will be timed to coincide with the widening of a nearby road, Laney said.

However, the issuance of fewer building permits for private projects means the sector may have to rely more on state projects, such as improvements to Kaumualii Highway, Port Allen harbor repair and Kapaa School library improvements.

Laney said that prices in Kauai’s real estate market, like elsewhere in the state, will continue to be pressured by foreclosures and short sales.

"Real estate prices cannot show a significant upswing until that inventory is worked down," Laney said.