May 11, 2012
HONOLULU – Tourism is the “primary engine of recovery” and will continue to drive Hawaii’s economy in the future, while the construction and government sectors are expected to improve and lighten their burden on the economy this year, according to the University of Hawaii Economic Research Organization forecast for the state.
“The drag from construction and government will end this year, setting the stage for broader growth,” said the report released today.
The UHERO forecast provided a statewide economic perspective; a county-by-county assessment is expected later this month. Maui was cited in several parts of the forecast.
For the construction industry, the report noted that the number of construction jobs statewide dropped 2 percent last year but that there has been a “mini uptick” in the past three months. The conditions are poorest on the Big Island and Kauai but are showing “more positive signs on Maui and Oahu.”
Maui posted a small net gain in construction jobs in the first quarter, the report said, cautioning that the data is sometimes subject to significant revisions.
“Forward-looking data on permits shows encouraging signs of stabilization, with statewide private permits up more than 15 percent in the fourth quarter, but again this is centered on Oahu and in Maui County,” UHERO said.
For the year, UHERO is forecasting a “slight positive statewide construction job growth” this year, strengthening to 9 percent growth next year.
In residential real estate, the sector “remains frail,” the forecast said. Except on Oahu, home prices continue to fall and sales volume is down on all Neighbor Islands – except Maui, which logged an increase in sales volume of 3 percent for the first quarter of this year. However, the increase in sales was accompanied by a similar-sized drop in prices.
Tourism remains healthy statewide, though Neighbor Island markets are not yet back to their pre-recession levels, the forecast said. Statewide, first-quarter visitor numbers jumped 8.5 percent from the same period last year, with visitor spending up more than 14 percent over the first quarter of 2011.
Arrivals from Japan have surpassed pre-earthquake/tsunami totals to 334,000 visitors, the highest numbers since the third quarter of 2007 and an 11 percent increase over the first quarter of 2011. New flights from Fukuoka and Osaka to Honolulu will boost the market’s strength. For the year, UHERO forecasts Japanese arrivals to rise 6.7 percent from 2011.
The number of visitors from the Mainland is up 4.7 percent from the first quarter of 2011. The decrease in flights from the Mainland to Hawaii and the “relatively weak” economic conditions on the Mainland have UHERO forecasting a 2 percent rise for visitors from the U.S. continent this year.
Total arrivals for the state will be up 5.2 percent for the year, the forecast said.
“This is a bit stronger growth than we had forecast in our first-quarter report, reflecting performance in the year to date,” said the forecast.
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