Posted on: Friday, June 20, 2003
Hawai'i economy looking up
By Sean Hao
Advertiser Staff Writer
|Some signs of a stronger pulse
Hawai'i's economy in the first quarter:
Total private building permits increased nearly 95 percent to $655.1 million, compared with the same quarter in 2002.
Bankruptcy filings declined 23 percent statewide to 969.
The wage and salary job count rose by 2.7 percent to 570,900.
The unemployment rate fell to an average 3.3 percent, down from 4.6 percent in the same period the year before.
Source: The state Department of Business, Economic Development and Tourism
Tourism, the state's main economic driver, remains slightly depressed, and yesterday the state cut its forecast for growth in visitor arrivals from 5.3 percent this year to a half percent.
However, with the recent increase in the number of airline flights from both Japan and the Mainland, there is optimism that the fallout from the war in Iraq and severe acute respiratory syndrome may be diminishing.
The Department of Business, Economic Development and Tourism raised its forecast for job growth from 1.4 percent to 1.9 percent this year. Most of that gain is expected to come from outside the tourism sector, as construction, housing, business services and other areas such as the healthcare industry continue to carry the load. Through April, the number of jobs in the state increased 3.2 percent year-over-year to 564,500 jobs.
Overall, department officials expect Hawai'i's economy to add more than 10,000 jobs in 2003.
"Hawai'i's underlying economy has been showing positive gains this year," said department director Ted Liu. "These gains have been helped along by very strong construction and real estate activity, which has buoyed other areas of the economy."
The strong job market has helped keep a lid on the state's jobless rate, which at 3.7 percent in April remained well below the national average of 5.8 percent.
This year's job gains, however, come on the heels of 2002, a year in which the economy was weakened by the lingering effects of 9-11. Still, the numbers were welcome news given what could have emerged from this year's geopolitical events.
"We didn't see a significant negative effect" from either war or SARS, said Franciso Corpuz, a research statistician with the state labor department. "That's kind of surprising."
Bankruptcies are down
Unemployment benefit claims, another key economic barometer, have trended lower throughout 2003, though the most recent data indicate a slight increase.
Initial claims for the week ending June 8 stood at 1,754, versus 1,644 filed in the year-ago period. Nationally, the Labor Department yesterday said that new claims for unemployment benefits dropped for the second consecutive week, declining by a seasonally adjusted 13,000 to 421,000 a five-week low.
Lack of significant job losses likely accounts in part for a 23 percent drop in bankruptcy filings statewide through March, the most recent period for which figures are available.
Like last year, Hawai'i's economy continues to benefit from strength outside the tourism sector. However, while job levels remain off their peaks, the number of leisure and hospitality jobs statewide improved to 98,400 in April, compared with 96,800 in April 2002.
Based on the job gains and strength in the market for Mainland visitors, the department expects gross state product for 2003 to increase by 2 percent to $47.57 billion. Personal income is expected to rise an inflation-adjusted 2.1 percent to $38.84 billion.
"The economy has held up quite well, mostly because of the non-tourism sectors," said University of Hawai'i economics professor Carl Bonham. "It's really better than you would have anticipated."
Low rates provide boost
Much of that strength is pegged to low interest rates, which is helping to drive construction and home sales. Statewide mortgage rates have been near or at record lows, with the average 30-year mortgage annual percentage rate at 5.07 percent as of Wednesday, according to a recent survey of 46 statewide lenders by the Honolulu Board of Realtors.
Low interest rates free up housing expenses for other purposes and in some cases allow people to cash out some of the equity in their home without dramatically increasing monthly payments.
"We've been in a fortunate situation that when tourism is down, we've had this favorable interest rate environment," Bonham said.
Government spending up
There's also been unexpected job and income growth in the government sector of the economy, although it's unclear how long that will last given budget constraints at the state and federal levels, Bonham added.
Federal spending in Hawai'i grew about 7.7 percent last year to $10.5 billion, according to figures released this month by the U.S. Department of Commerce. Those gains came in the form of increased salaries, retirement and disability benefits, and government procurement contracts.