UH economists expect personal income to grow 2.7% in 2006
MORE PEOPLE have jobs in Hawaii and they're earning more than ever -- especially in the construction industry, economists reported yesterday.
But the numbers are getting so high that it's got to slow down, said economist Byron Gangnes, who helped prepare the third-quarter report for the University of Hawaii Economic Research Organization.
"There's only room for so many visitors and we only have a labor force that can provide so much labor," Gangnes said in an interview. "These kinds of constraints pose a limit on how rapidly we can grow."
Still, moderate growth is forecast in the state's key economic indicators -- a 1.8 percent increase in jobs next year, 2.7 percent in income, 2.4 percent in visitor arrivals.
The latest data and forecasts erased signs of slight economic cooling at the top of the year, a summary of the report said, with real state economic growth projected at 4.3 percent for the year.
Construction jobs are expected to hit 32,300 by the end of the year, a full 10 percent higher than last year. That's also twice the growth rate of 2004 over 2003.
Indicating that some of the prosperity is shared by employees, the total income of construction workers is expected to increase 17.3 percent over last year.
With all the new workers, that doesn't mean each worker is getting all that increase, but it reflects the robust growth in the state's most active business sector.
The ramping up for massive renovation of military housing is partly responsible for growth of jobs in the construction industry, Gangnes said.
In all, 16,000 jobs will be added in Hawaii this year, the report predicted, and 13,000 of those will be in other areas besides construction.
The only job decline expected is in government jobs -- a modest 0.2 percent drop. Gangnes said most of the losses are in federal jobs, with state and local government employment holding steady.
Inflation at 3.7 percent this year will trim the dollars employees take home. Inflation is expected to increase to 3.9 percent in 2006, with Hawaii's forecast running just slightly ahead of the national projections.
Gangnes said economists have had a hard time nailing down projections because the base figures keep changing as new data comes in.
"Luckily, the revisions are on the upside, and that's been the story for the last year or so."
The report notes that economic growth in Japan is slowing down but still growing moderately, with 3.4 percent more visitors expected this year. U.S. tourism, in contrast, is expected to grow 6.7 percent, a higher forecast than last quarter.
"The growth of U.S. visitors has surprised us," said the report's co-author, university economist Carl S. Bonham.
Despite the difference in U.S. and Japanese tourism growth, Bonham said visitors from both are expected to level off to 2.5 percent growth from the U.S. mainland and 2.7 percent from Japan.
He said Hawaii is often affected differently from other tourist destinations.
While pocketbook issues such as rising gas prices can reduce tourism overall and lead people to question whether they can splurge, some people cut back in other areas and still take that one big trip to Hawaii.
"They still want to go someplace really nice," he said.
Jobless rate remains at 2.7%
Hawaii's jobless rate stood at 2.7 percent in October, allowing the state to continue boasting the lowest unemployment in the nation for the eighth straight month.
The state Department of Labor and Industrial Relations said yesterday that the opening of new shops and the hiring of workers by retailers ahead of the holiday shopping season helped fuel the creation of jobs.
Hawaii's strong housing market powered a rise in construction jobs while rising visitor arrivals created more jobs in the tourism industry.
Government and manufacturing jobs declined, however.
Nationally, the unemployment rate stood at 5 percent in October. Hawaii was the only state to report an unemployment rate below 3.4 percent.
The number of people with jobs in the islands rose 5.3 percent over October last year to 630,200.
The state labor force -- defined as those with jobs and those seeking employment -- grew more slowly, by 4.9 percent, to 647,950 over the same period.
Separately, the labor department said the state's unemployment compensation fund stood at $443 million in October -- about $8 million more than last month.