RATE OF STABLE ECONOMIC GROWTH CONTINUES
News Release from DBEDT, May 21, 2019
HONOLULU – The Department of Business, Economic Development and Tourism (DBEDT) released its second quarter 2019 Statistical and Economic Report today with first quarter results. In this report, DBEDT kept its economic growth forecast (GDP) from the first quarter of 2019 unchanged at rates between 1.2 percent and 1.4 percent for the next few years.
Economic data for the first few months of 2019 were mixed. The good news includes the following:
- Total value of private building permits increased 8.7% during the first quarter of 2019. Though the value of residential permit decreased by 19.0 percent, value for commercial and industrial permits decreased by 39.3 percent, value for additions and alterations increased by 67.8 percent which could offset the decrease in the other two categories.
- State government spending on capital improvement projects increased 12.5 percent during the same period.
- State general fund revenue increased 7.6 percent during the first four months of calendar year 2019, with an increase of 9.3 percent for the general excise tax and 5.4 percent for individual income tax. The two categories of taxes accounted for 85 percent of the total state general fund revenue. The general fund revenue collected during the first four months of 2019 was the historical record high level for the first four calendar month period.
- Non-agriculture payroll jobs increased 3,200 during first four months of 2019. Jobs increased the largest in state government with 1,600 additional jobs; followed by the construction industry which added 700 jobs; food services with an additional 600 job; professional services, health care, and information each added 500 jobs during the first four months of 2019.
- Unemployment claims as of the week of May 11 decreased by 2.9 percent from the same period in 2018.
The challenging areas during the first few months of 2019 include:
- The unemployment rate, which is not seasonally adjusted, averaged 2.9 percent growth during the first four months of 2019, higher than the 2.2 percent experienced during the same period in 2018. Several industries lost jobs with retail trade losing the largest number of jobs at 1,500; followed by manufacturing with 700 fewer jobs; and art, entertainment and creation loss of 400 jobs.
- According to the data released by the Department of Labor and Industrial Relations, Hawaii’s unemployment rate, due to economic reasons, was 4.0 percent between second quarter of 2018 and first quarter of 2019, higher than the U.S. at 3.8 percent for the same period. This included those people who gave up looking for jobs and those who worked part-time but wanted to work full-time if opportunities permitted.
- Though visitor arrivals increased by 2.6 percent during the first quarter of 2019, visitor spending decreased by 2.4 percent due to the decrease in daily visitor spending for all the markets except cruise visitors who showed a 2.3 percent increase in daily spending.
- Real estate indicators were also mixed during the first four months of 2019. Number of sales for single family and condominium homes declined on all major islands except for condo sales on the island of Hawaii which increased by 4.4 percent. Median sale prices for single family homes increased on all islands except Kauai which experienced a decrease in median sale price of nearly 10.0 percent. Median condo home sale prices fell on Oahu and the island of Hawaii but increased on Maui and Kauai.
The U.S. economy continues to perform well. According to the most recent economic forecasts by more than 50 top economic research organizations (the Blue Chip Economic Indicators, May 10, 2019), the U.S. economy will grow at 2.6 percent in 2019 and 1.9 percent in 2020 while the previous Blue Chip forecast for the U.S. economy was at 2.4 percent for 2019. Most of the world economies will experience slower but stable growth into 2020.
Given the economic conditions inside and outside of Hawaii, DBEDT expects that Hawaii’s economy will continue the slower growth for the next few years between 1.2 and 1.4 percent.
“Hawaii has been experiencing lower but stable economic growth during the last two years as reflected by declining visitor spending and increasing construction value.” said DBEDT Director Mike McCartney. “Our labor market continues to perform well with unemployment rate still among the lowest five states in the nation during the first four months of 2019.”
DBEDT revised the visitor industry forecast with visitor arrivals now growing at 2.6 percent for 2019, higher than the 2.0 percent projected last quarter. However, the growth of nominal visitor expenditures is projected to be 1.1 percent for 2019, lower than the 3.3 percent projected last quarter. This lower visitor expenditure projection is based on the daily visitor spending data reported by the Hawaii Tourism Authority. During the first quarter of 2019, daily visitor spending decreased by 2.6 percent.
DBEDT revised its projection on the non-farm payroll job count slightly downward from the previous quarter forecast to 0.6 percent for the next few years. The unemployment rate projections were changed upward to 3.0 percent for 2019 and will gradually increase to 3.6 percent by 2022.
DBEDT lowered the projection for consumer inflation, as measured by the urban Hawaii Consumer Price Index, from the previously projected, now at 1.7 percent for 2019 and 2.0 percent for the next few years.
DBEDT revised the nominal personal income growth rates slightly downward from the previous quarter forecast to 3.2 percent for 2019 and 3.6 percent for the next few years. According to the U.S. Bureau of Economic Analysis, Hawaii nominal personal income grew 2.9 percent in 2018, which is the lowest growth since 2014. The average nominal personal income growth rate was 4.5 percent between 1988 and 2018. Growth of real personal income was unchanged from the previous quarter forecast.
The DBEDT Quarterly Statistical and Economic Report contains 136 tables of the most recent quarterly data on Hawaii’s economy as well as narrative explanations of the trends in these data.
The full report is available at: dbedt.hawaii.gov/economic/qser/.
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