The strengthening Hawaii economy is prompting more consumers in the state to pull out their credit and debit cards.

Card sales at businesses open at least a year jumped 10.4 percent in the first quarter from the same period a year ago to represent the biggest increase in two years, according to a business activity report due out today by First Hawaiian Bank, the state’s largest local card processor of merchant services.

A pickup in tourists and hotel occupancy, as well as a stabilizing housing market and improving job scene, appear to be boosting consumer confidence.

"This strong showing is further indication that consumer confidence is growing and that Hawaii’s economic recovery is continuing," said Keith Nagata, senior vice president and business services division manager for First Hawaiian Bank.

Consumers increased their spending most at supermarkets, which had a gain of 21.8 percent, followed by utilities/communications, hotels, convenience stores, shipping, restaurants and retail.

"The report demonstrates the economy is getting stronger over time," First Hawaiian President and CEO Bob Harrison said. "These are all solid consumer confidence type of sectors that have increased — supermarkets, hotels, restaurants, retail. If people are feeling better, this is where the money gets spent."

He said the increased transactions in supermarkets — the top percentage gainer — means that local people are spending more.

Hotels, as expected, had the largest transaction volume in the first quarter at $185.2 million. Restaurants were next at $117.3 million, followed by retail at $87.6 million.

Wayne Kauppi, owner of Hog Island Smokehouse in Kaimuki, said the nearly 4-year-old Memphis-style barbecue takeout restaurant increased business in the first quarter.

"We’re finding that there has been a more positive outlook with people’s purchases and we’ve been seeing our regular customers a little more frequently," he said. "That’s not a result of changing our menu or anything. It’s more that they’re spending a little more money on their discretionary purchases. We’re easily up more than 5 percent in sales from a year ago and up 10 percent in card transactions at the time of the purchase instead of cash."

Overall, Hawaii merchants rang up $756.7 million in card sales during the first three months of this year compared with $685.6 million in the year-earlier period.

"I think it’s very positive," Harrison said of the report. "It doesn’t mean the entire economy is coming back, but to me it means it’s continuing to improve. The entire economy will be strong when we re-engage the construction sector. But having said that, I’m very pleased to see this kind of growth in consumer spending. That’s definitely a positive."

Harrison said the bank is seeing "a little bit" of gain in construction with just one high-rise project being built, the 24-story Holomua condo tower on the corner of Kalakaua Avenue and Young Street.

The University of Hawaii Economic Research Organization said in a March 16 report that it expects construction jobs in the state to rise in 2012 for the first time in four years. Harrison acknowledged that might happen by year’s end but he’s not seeing that now from the conversations he’s having with carpenters and electricians.

"There are projects actively marketed where there’s a chance of construction later this year or early next year," he said.

The bank’s business activity report doesn’t include the construction sector because credit and debit cards aren’t typically used in that industry.

Clearly, though, tourism is leading the economic rebound.

Statewide visitor arrivals and spending were up 6.7 percent and 11.4 percent, respectively, through February from the same period a year ago in the most recent available data from the Hawaii Tourism Authority.

"It is a positive sign that consumer spending is back up," said Leroy Laney, an economic adviser to First Hawaiian and a professor of economics at Hawaii Pacific University. "We recognize that tourism is the leading sector and construction is the lagging sector, but we see some underlying strength in the retail sector and consumer spending in general. That’s a positive sign because a lot of that is local."

In other economic sectors that point to a rebound:

» Hotel occupancy in the state increased 2.7 percentage points to 73.4 percent for all of 2011, room revenue grew 12.7 percent to $2.87 billion, and the average daily room rate increased 8.5 percent to $189.62, according to Hospitality Advisors LLC and Smith Travel Research.

» The median single-family home price on Oahu rose 10.4 percent to $616,950 in the first quarter of this year, according to the Honolulu Board of Realtors.

» And the state unemployment rate declined to a three-year low of 6.4 percent in February, the state Department of Labor and Industrial Relations reported.

State economists are forecasting inflation-adjusted, or real, personal income to increase this year. UHERO said in a Feb. 10 report it was forecasting real personal income to rise 1.8 percent this year compared with 2011. The state Department of Business, Economic Development and Tourism predicted in a Feb. 22 report that real personal income will grow 1.2 percent. And Laney projected last November that real personal income this year would rise 0.9 percent but said last week that if he were to revise that figure now it would be higher. He said his forecast last November was made when there was a lot of pessimism about Europe and the effect it might have on the U.S. market.

First Hawaiian, the largest bank in the state with assets of $16.1 billion, has more than 7,500 merchant locations throughout Hawaii, the mainland, Guam and the Commonwealth of the Northern Mariana Islands. The report, though, focused solely on Hawaii.

Overall, the bank processed $4.1 billion worth of card transactions in 2011, including businesses open less than a year. That’s up 8 percent from $3.8 billion in 2010.