Hawaii’s unemployment rate sinks to 3.5%

Hawaii’s unemployment rate plunged in September to 3.5%, its lowest level since before the pandemic, as the state grew its nonagricultural payroll ranks by 2,700 from the previous month.

The staggering drop from a revised 4.0% in August came as the leisure and hospitality sector added 2,700 jobs to match the overall increase, according to data released Thursday by the state Department of Business, Economic Development and Tourism. Hiring in other categories offset each other.

Hawaii’s seasonally adjusted jobless rate also matched the U.S. rate of 3.5%, Since the start of the pandemic in April 2020, the state’s unemployment rate has been higher than the nation every month except for June 2021 and September 2022, when the rate was the same as the nation’s.

“Given that Hawaii was one of the hardest-hit when the pandemic started (Hawaii unemployment rate was at 22.4% vs. 14.7% for the U.S. in April 2020), Hawaii’s unemployment rate has been falling faster than the nation and now has caught up with the U.S.,” DBEDT chief economist Eugene Tian said.

Hawaii’s labor force, which includes those who are employed, those who are unemployed but actively seeking work and those who are self-employed, dipped to 677,000 in September from 679,000 in August. But those employed rose to 653,250 from 651,650 the previous month, and those unemployed fell to 23,750 from 27,350.

“The lower unemployment rate in September — the lowest since April 2020 — is the result of two factors: economic growth and a decrease in the labor force,” Tian said. “We saw the labor force decrease by 2,000 in September. This indicates that there were more people who withdrew from the labor force. They either gave up looking for jobs, or they decided to move out of state.”

Over the past year, nonfarm payroll jobs increased by 20,800, or 3.5%. The 2,700 increase in September from August was healthy, Tian said, because the average month-over-month increase is 2,059.

Nonfarm payroll jobs are calculated from a mail survey of employers and are considered a better indicator of job growth due to a larger sample size than the labor force data, which is compiled from a telephone survey of households. In the payroll count, one person might be counted multiple times if that person has multiple jobs.

Tian noted that there might be a mild economic recession in the U.S. during the first half of 2023, according to the consensus economic forecasts.

“Hawaii will be impacted by the recession, but since Hawaii is still recovering from the COVID-19 recession — the U.S. economy has been fully recovered — and with the opening of the international tourism, the impact to Hawaii may not be large,” he said. “Hawaii may experience a slowdown in economic growth, mainly from the slowing down in private construction and real estate. Hawaii may not see an economic recession in 2023, but the unemployment rate may increase slightly.”

The jobless rate fell in the state’s four major counties in September from August. State and national labor force data is adjusted for seasonal factors, but the county jobs data does not take into account variations such as the winter holiday and summer vacation seasons.

Honolulu County’s jobless rate fell to 3.3% from 3.4%, Hawaii County’s rate dropped to 3.5% from 3.6%, Kauai County’s rate decreased to 4.0% from 4.2% and Maui County’s rate sank to 3.7% from 3.9%. In Maui County, Maui’s rate stayed at 3.7% and Lanai’s rate held at 1.8%. Molokai’s rate declined to 7.4% from 10.4%.