Isle unemployment rate
falls to lowest in 14 years

It is the third straight month
that the local figure, at 2.7%,
is the lowest in the nation

Hawaii's unemployment rate, reflecting the state's rebound in tourism and strong real estate, construction and retail sectors, dropped to a 14-year low of 2.7 percent in May.

The number of unemployed decreased by 1,300, to 17,050 people, last month from the previous month and pushed down the jobless rate from 2.9 percent in April, according to data released yesterday by the state Department of Labor and Industrial Relations. It marked the third consecutive month the rate has been below 3 percent and that Hawaii has had the lowest rate in the nation.

The last time Hawaii's jobless rate reached 2.7 percent was in June and July 1991. Its all-time low was 2.2 percent in October and November 1989. In May 2004, Hawaii's unemployment rate was 3.3 percent.

The nation's unemployment rate was 5.1 percent last month, down from 5.2 percent in April and 5.6 percent in May 2004.

"We're simply adding jobs faster than the labor force is growing," said Carl Bonham, executive director of the University of Hawaii Economic Research Organization. "What is causing that is an extremely vibrant economy. There's virtually no sector of the economy that isn't adding jobs. Employers are finding it difficult to find qualified workers in a whole variety of fields. ... We're firing on all cylinders."

The trade, transportation and utilities industry added 600 jobs in May from the previous month, largely because Norwegian Cruise Line continued hiring for its Pride of America ship, which is scheduled to begin weekly interisland voyages from Honolulu next month. Hiring in most other industries was up from a year earlier.

Although the number of jobs fell by 4,350, to 608,200, in May from the previous month, it rose by 12,900 from May 2004. Overall, the number of people either employed or looking for work fell by 5,650 from April to 625,250 last month but rose by 9,950 from a year earlier.

"The labor force changes not just because the total population changes, but it also changes because people who were formerly not in the labor force enter or vice versa," Bonham said. "So when the economy is growing rapidly, the labor force can go up because people who became discouraged before may start looking."

With the unemployment rate dropping, Hawaii businesses have been stretched thin trying to fill vacancies.

"When you're down below 3 percent, every single person who is willing to work is working," said Carol Pregill, president of the nonprofit Retail Merchants of Hawaii trade association. "With the booming construction industry and the booming retail industry, and with the tourism industry being up, we've run out of people. Some of our multistore members have 80 openings to fully staff their stores at the levels they would like."

All the neighbor islands except Lanai showed not- seasonally-adjusted year- over-year declines in unemployment rates. Maui had the lowest rate at 2.1 percent last month compared with 2.7 percent a year earlier. Kauai fell to 2.4 percent from 3.2 percent; the Big Island declined to 2.9 percent from 3.9 percent; and Molokai dropped to 6.9 percent from 10.5 percent. Lanai rose to 2.4 percent from 1.9 percent. The state does not break out seasonally adjusted numbers for each of the islands.

A seasonally adjusted rate takes out the effects of changes associated with the seasons, such as teachers being out of school.

Separately, the Labor Department said the state's Unemployment Compensation Fund had a balance of $418.6 million at the end of May and projects a balance of $452 million at the end of this year. The fund was established in 1937 to provide temporary income to unemployed people.