Signs of Isle business slump continued in December

By Frank Cho
Advertiser Staff Writer

A key measure of future economic activity in Hawai'i fell for the second consecutive month in December, suggesting slower economic growth for the state in the second half of this year.

The state Department of Business, Economic Development and Tourism said yesterday that nearly all of the leading economic indicators tracked by the state fell in December because of falling consumer confidence and an apparent slowdown in construction, employment and real estate transactions.

"Concerns about the Mainland economy and the continuing struggles in Japan may start to affect Hawai'i in the second half of this year," said Seiji Naya, the department's director. "The declines in the Hawai'i components of the LEI may be showing early signs of these future impacts."

The comprehensive index is watched closely by Hawai'i economists, planners and business leaders as a sign of where the state's economy may be headed in the next five to 10 months.

Eight of the 10 index components fell in December over the previous month. The two that rose were both Hawai'i components: average work hours and O'ahu residential real estate prices.

All the national and international components declined in December, the state said.

The yen-dollar exchange rate fell, further weakening the buying power of Japanese tourists, and growth in earnings for Japanese workers slowed.

All three Mainland components — the National Leading Index, Pacific region consumer confidence and the interest rate spread — were all lower for the fourth month in a row.