Unemployment is dropping, while business is increasing, state Department of Business, Economic Development and Tourism officials said Wednesday.
In the department’s third quarter 2014 statistics and economic report, officials said Hawaii Island’s unemployment rate dropped from 7 percent to 6 percent between the first part of 2013 and first quarter of this year. At the same time, Hawaii County had the second-highest increase in building permit values in the first quarter of 2014, a $13.8 million increase, or 16.2 percent.
Kona-Kohala Chamber of Commerce President Vivian Landrum said she’s seen some evidence of the economic improvement at the local level.
“My membership renewals are about 5 percent above what they were last year,” Landrum said. “Plus we added nine new members.”
When she talks to her members, they are generally feeling positive about the economy.
“Everyone is encouraged with what is happening,” Landrum said.
There is one sector where business owners are slightly concerned, she added. Tourism arrivals and spending in Kona weren’t as good in the second quarter of this year as they were last year.
That “can have a drop-down effect,” Landrum said.
DBEDT officials said visitor arrivals during the first half of 2014 were down by 0.5 percent. That marked the second straight quarter with a decline, after 17 consecutive quarters of growth. The growing streak that ended in the last quarter of 2013 dated back to the third quarter of 2009, officials said. An increase in international visitor arrivals was more than offset by the decrease in domestic visitor arrivals in the quarter.
Officials pointed to the increasing number of scheduled air seats, which they called “an indicator of the supply side of tourism” as a balance to that.
“Increased air seats motivates a prediction that visitor arrivals hit a new record this year, with 8.3 million visitors and $14.9 billion in spending,” officials said in a press release.
Visitor counts are already recovering from the reductions during the approach and landfall of Tropical Storm Iselle and the threat of Hurricane Julio. Those storms resulted in 13,500 visitor reductions for Aug. 7 and 8, officials said.
The report was optimistic as it looked to the future.
“Beyond 2015, the economy will be on the expansion path with job growth expected to increase 1.4 percent in 2016 and 1.3 percent in 2017, the report summary said. “Visitor arrivals are expected to increase 1.9 percent in 2016 and 1.8 percent in 2017. Visitor expenditures are expected to increase 4.6 percent in 2016 and 4.5 percent in 2017.”
Personal income is projected to grow 4 percent this year, a percentage point lower than originally forecast.
Looking ahead to 2016, unemployment is expected to continue its decline, reaching 3.8 percent statewide that year and 3.5 percent in 2017.
The state’s low inflation rate was another positive sign, officials said.
“Hawaii’s inflation rate (1.1 percent) was lower than the U.S. average for the first time since 2003,” DBEDT Director Richard C. Lim said. “At the same time, our labor market continues to improve; we are seeing a record-high labor force and workers employed during the first seven months of this year.”
Officials projected the rate would remain low the next few years.
DBEDT predicted the consumer inflation rate will be 1.5 percent in 2014, 2.2 percent in 2015, and gradually increase to 3 percent by 2017.
The national inflation rate was 1.7 percent in the second quarter of this year. Last year, Honolulu inflation increased just 0.5 percent from the second half of 2013.
Clothing was the main driver for the low inflation after the sector dropped 5.9 percent from the year-earlier period, Eugen Tian, chief economist for the state Department of Business, Economic Development and Tourism, told the Honolulu Star-Advertiser.
Local inflation was higher than the U.S. for more than a decade, Tian said: “Inflation goes in cycles, and now I think it will be lower than the U.S. for a while — maybe for 10 years.”
Clothing prices have been declining for a year and a half, Tian said.
In 2013, apparel pricing was down 2.3 percent in the first half of the year from the year-earlier period.
“From a national standpoint, I think retail apparel is a very competitive market,” said Sheri Sakamoto, president of Retail Merchants of Hawaii. “So it’s possible what our national stores are doing is trying to meet the needs of their consumers.”
Small retailers haven’t decreased their prices, but they’ve kept prices flat, Sakamoto said.
Hawaii, which has the highest electricity costs in the nation, saw prices in that sector rise 2.8 percent during the first six months of 2014 over the year-ago period. Education and communication increased 2.7 percent, recreation rose 2.5 percent and transportation was up 2.1 percent. Shelter was up 0.6 percent, and gas prices decreased 2 percent.
The Associated Press contributed to this report.
