For Immediate Release: August 19, 2004
DBEDT Release News 04-25

HONOLULU--Based on the robust performance of the visitor sector and continued strength in construction activity, the Department of Business Economic Development and Tourism (DBEDT) now expects a 2.1 percent increase in jobs for 2004, up from a forecast of 1.5 percent in the last (March) forecast.

The forecast is presented in the August 2004 issue of the Department's Quarterly Statistical and Economic Report. The updated forecast for the state's economy also anticipates a 7.0 percent increase in visitor arrivals for 2004, nearly two percentage points higher than in the March forecast. The new report is available on the DBEDT website at http://www2.hawaii.gov/dbedt/latest.

"The real news is that our visitor industry has exceeded all expectations, including both arrivals and daily spending," said DBEDT Director Theodore E. Liu. "With the rebound in tourism and robust construction activity, our state is seeing its strongest economic performance in years."

Total visitor days jumped 7.3 percent in the second quarter of 2004 from a year earlier, according to the report. At the same time, visitor spending was stronger - increasing by 8.7 percent for the year and 6.2 percent for the quarter. Total visitor expenditures were up a very strong 14 percent. Increasing international arrivals surged 39.9 percent in the second quarter from the year before. Domestic arrivals were up a strong, 6.9 percent for the period.

The report shows that the April to June quarter was particularly strong for jobs as well as tourism. The number of wage and salary jobs in the state showed a 2.4 percent increase from the same quarter of 2003. Construction was the strongest source of job growth with a 3.6 percent increase from the previous year. Agriculture, retail & wholesale trade, and healthcare/social assistance, all showed job gains of over 3 percent in the second quarter. In the mean time, the unemployment rate fell to just 3.3 percent in the second quarter, more than a percentage point below the same period a year earlier.

Most other indicators of economic activity were also strongly positive in the first and second quarters of 2004, according to the report. General Fund Tax Revenues were up 16.3 percent this past second (calendar) quarter from the same 2003 period. Tax-collection increases in the second quarter ranged from a 6.3 percent advance in the General Excise and Use Tax, to a 61.8 percent increase in Corporate Income Tax Collections. Personal income rose 5.5 percent in the first quarter of the year from a year before. The value of government construction contracts awarded for the same period increased more than 800 percent from the year before. Also, total bankruptcies in the state declined by 11.4 percent in the first quarter of the year.

Based on an assessment of the domestic and international economic environment as well recent trends locally, the report forecasts a 7.0 percent gain in visitor arrivals for 2004. That will likely moderate to a 2.9 percent gain in 2005. Total visitor-days will grow somewhat slower than arrivals -- 4.5 percent for 2004 and 2.4 percent in 2005. This is because of more rapid growth in international visitors, who tend to have shorter stays in Hawaii. This will bring down the average overall length of stay somewhat. Visitor expenditures are forecast to increase 7.0 percent in 2004 and 4.8 percent in 2005.

Following their healthy, 1.9 percent increase in 2003, wage and salary jobs are now expected to top that in 2004 with a 2.1 percent gain. That growth is expected to ease in 2005 to a more sustainable, 1.3 percent gain. Personal income measured in current dollars is expected to show a 5.5 percent increase in 2004. This will amount to a 2.9 percent increase in real terms, after inflation is taken into account. The Honolulu Consumer Price Index is expected to advance by 2.5 percent in 2004. This is up from a 2.2 percent increase forecast in March.

Overall, the economy is expected to grow 2.6 percent in 2004 as measured by real Gross State Product (GSP). That rate is expected to moderate slightly to 2.3 percent for 2005.

The report expects economic growth to continue in the 2006 to 2007 period, but at a somewhat slower pace. Real GSP growth is forecast to ease gradually to 2.2 percent for both 2006 and 2007. For the same years, visitor arrivals will also likely moderate to about 2.5 percent per year. Personal income is expected to increase at around 4.5 percent per year in the 2006 to 2007 period. That translates to a real growth in personal income after inflation of about 2.5 percent per year for the period.

The Quarterly Statistical and Economic Report also 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, as well as Excel workbooks containing all of the data tables, are available on the DBEDT website, at http://www.hawaii.gov/dbedt/info/economic/data_reports/qser.

For more information, contact:
Dave Young
Communications
Phone: (808) 587-1212
Email: dyoung@dbedt.hawaii.gov