State Forecasts Strong Economic Growth

DBEDT Director Richard C. Lim. Photo courtesy of DBEDT.

By Sonia Isotov

In its fourth quarter 2012 economic report, the Department of Business, Economic Development and Tourism (DBEDT) projected higher growth of visitor-related indicators and more optimistic growth of most other economic indicators in 2012.

DBEDT expects positive economic growth in Hawaii for the rest of 2012 and expects to see continued positive growth in 2013.

“We remain cautiously optimistic with regard to the state’s immediate economic future,” said Richard C. Lim, the director of DBEDT, in a written statement.

“Despite political uncertainties often inherent in election cycles and recent natural disasters, the visitor industry is projected to remain strong.”

Overall economic conditions were mostly positive across counties in the second quarter of 2012. The unemployment rate decreased in all neighbor island counties, and increased only slightly in Honolulu. The unemployment rate in Maui County decreased 1.1 percentage points from 7.9% to 6.8%.

DBEDT expects total visitor arrivals to increase 9.4% in 2012, 0.8 of a percentage point higher than the previous forecast.  The forecast for the growth of visitor days in 2012 remain unchanged compared with the previous forecast.

Total visitor arrivals by air and visitor days increased in all counties. In the second quarter of 2012, visitor arrivals by air increased 14.2% in Honolulu, 8.0% in Hawaii County, 6.5% in Maui, and 6.6% in Kauai.

Following a higher-than-expected growth in visitor arrivals in the first three quarters of 2012, DBEDT projects that overall visitor arrivals will increase by 9.4% for 2012, 0.8 of a percentage point higher than its previous forecast.  Total visitor spending is now projected to increase 18.8% in 2012, 3.6 percentage points above the previous forecast.

Total non-agricultural wage and salary jobs also increased in all counties. Maui County saw a net gain of 2,250 jobs or 3.4% increase in the second quarter of 2012 from the same quarter of 2011.

Lim also noted that construction jobs increased 1.4% during the third quarter of 2012 after 17 consecutive quarters of decline.

Construction jobs increased 1.4% during the third quarter of 2012 after 17 consecutive quarters of decline. Photo courtesy of Census Bureau.

“The construction industry has turned a corner and we hope to see greater growth in that sector next year,” Lim said.

In the second quarter of 2012, the growth rates of the values of total private building permits were positive for all counties with second quarter building permits data. In this quarter, private building permits increased $131.9 million or 42.1% in Honolulu; increased $29.5 million or 76.0% in Maui; increased $2.6 million or 15.8% in Kauai.

State Capital Improvement Project spending increased 32.9% during the first nine months of the year, and the private building permit value increased 39.1% during the same time period. The value of private building permits increased in Honolulu, Maui, and Kauai.

For the local economy, DBEDT increased the forecasted growth rates of most of the economic indicators such as real personal income, GDP, and jobs compared with its forecast in August 2012.

For other major economic indicators, the current forecasts are mostly more optimistic compared with the previous forecasts.  DBEDT expects the Honolulu Consumer Price Index (CPI), a proxy for inflation, to rise 2.5% in 2012,0.3 of a percentage point below the previous forecast.

The DBEDT Quarterly Statistical and Economic Report contains more than 100 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:

http://www.hawaii.gov/dbedt/info/economic/data_reports/qser.