Hawaii’s economy is still growing but at a slower pace.
The state revised its growth forecast lower Wednesday and projected that Hawaii’s inflation-adjusted gross domestic product, the broadest measure of economic output, will rise just 2.5 percent this year. That is down from the 3.1 percent it projected just three months ago.
STABLE PROGRESS
The state’s forecast for year-over-year percentage changes through 2018:
| |
2015 |
2016 |
2017 |
2018 |
| Visitor arrivals |
2.5 |
1.8 |
1.7 |
1.7 |
| Visitor spending |
2.0 |
4.6 |
4.1 |
4.1 |
| Payroll jobs |
1.1 |
1.2 |
1.0 |
1.1 |
| Unemployment rate* |
3.9 |
3.6 |
3.4 |
3.3 |
| Inflation rate* |
1.5 |
2.2 |
2.5 |
2.7 |
| Personal income** |
2.5 |
2.6 |
2.7 |
2.3 |
| GDP** |
2.5 |
2.4 |
2.2 |
2.3 |
* Percentage of workforce
* Adjusted for inflation figures for 2015-18 are forecasts.
Source: State Department of Business, Economic Development & Tourism
|
Visitor spending also was ratcheted lower by the state Department of Business, Economic Development & Tourism because of the strong U.S. dollar. Fewer Japanese visitors are coming, and the ones who do come spend less.
Spending is now forecast to grow just 2 percent to $15.15 billion. While it still would represent a fourth straight record year, it’s lower than the state’s earlier forecast of 3.4 percent and $15.36 billion.
All signs weren’t pointing down, however: The state raised its visitor arrivals forecast and now projects a 2.5 percent increase to a record 8.49 million. That’s up from last quarter’s projected 2.1 percent increase to 8.45 million.
"The downward adjustment in Hawaii’s economic growth rate is mainly due to the slower than expected growth of the U.S. economy during the first quarter and the decline in Japanese visitor spending as a result of a strong U.S. currency," DBEDT Director Luis Salaveria said. "Our economic fundamentals are still healthy. Our labor market is among the best in the U.S., and our construction industry is picking up, especially in residential construction."
JAPANESE VISITOR arrivals were down 4.7 percent to 358,880 during the first quarter while their spending was down 16.4 percent to $509.1 million. On Wednesday, the U.S. dollar was fetching 119.13 yen.
Despite the lower GDP forecast, DBEDT said that compared with the average economic growth rate of 1.2 percent during the past 20 years (1994-2014) the state is still "very healthy." DBEDT expects healthy growth to continue into the future and is forecasting GDP to grow 2.4 percent in 2016, 2.2 percent in 2017 and 2.3 percent in 2018.
One area gaining strength is construction. The value of private building permits granted soared 71.1 percent during the quarter from the year-ago period with commercial and industrial construction permits leading the way with a 304.3 percent gain. Residential permits jumped 220.3 percent.
The pace of job growth, though, slowed in Hawaii’s record labor force.
Nonagricultural payroll jobs, which increased at a lower-than-expected 0.8 percent annualized rate in the first quarter, are now projected to increase by 1.1 percent in 2015, lower than the 1.5 percent projected in DBEDT’s February report.
Hawaii’s labor force, which includes those who are employed and those who are unemployed but actively seeking work, reached 675,750 at the end of March. It was the 15th month in a row that the labor force number set a record. The nonagriculture job count of 628,500 at the end of the quarter also set a record.
Those records were reflected in initial unemployment claims, which fell about 17 percent during the first four months of 2015 to 1,500 compared with 1,800 in the year-earlier period.
DBEDT also lowered its forecast for Honolulu inflation to 1.5 percent, down from 1.8 percent in its previous forecast. And it lowered its forecast for personal income growth to 2.5 percent, from 2.8 percent. DBEDT kept its forecast for the state’s not-seasonally adjusted unemployment rate at 3.9 percent.
DBEDT’s full report, which contains more than 100 tables, is available online at dbedt.hawaii.gov/economic/qser.
