WAILUKU - While Maui County led the state in making incremental gains toward economic recovery in 2011, "recovery is far from complete," according to a report issued today by the University of Hawaii Economic Research Organization.
However, "the good news is that conditions look favorable for additional gains in 2012," says the report, titled "Jobs Still Lag in County Recoveries."
The economists predict that all four of the state's counties will continue economic recoveries, with tourism leading the way and propelled by an ongoing boom in arrivals from nontraditional markets.
Construction workers use heavy equipment to prepare the ground for A&B Properties’ Maui Business Park II, a 179-acre expansion of industrial-zoned property near Kahului Airport. University of Hawaii economists reported that commercial construction permits in Maui County rose 60 percent in 2011, while residential building projects continued to lag behind. In its economic forecast for counties, the University of Hawaii Economic Research Organization predicted moderately strong job growth in construction in Maui County.
The Maui News / MELISSA TANJI photo
In Maui County, the volume of visitors - as measured by visitor days - has grown to within four percentage points of the peak in 2006, two years before the Great Recession hit at the end of the first quarter in 2008. (The economists note, however, that visitor arrivals to the county remain about 12 percent below 2006 levels, partly because mid-2000 figures were skewed upward by short-staying cruise visitors.)
This year also will be good for Maui County tourism, the economists predict, because of more airline seats being available, although a smaller increase by percentage as compared with more air seats to the Big Island and Kauai, according to a recent forecast of airline seats by the Hawai'i Tourism Authority.
The university economists forecast a 4.8 percent increase in visitor arrivals to Maui this year. The U.S. market should gain more than 3 percent, following a marginal increase of 1.6 percent in 2011, the economists said. While Japanese visitor numbers have bounced back after the March 2011 earthquake and tsunami, the number of Japanese arrivals to Maui represent less than 3 percent of all visitors.
Maui's strongest visitor markets will be in Canada, non-Japan Asia and Oceania, which are expected to expand by nearly 11 percent this year before decelerating to more modest growth in 2012, the economists said.
Airlift from Canada increased to each county, but Maui had the largest gain in 2011, with 22 percent more airline seats available from Canada.
"Visitors from markets other than the U.S. and Japan have grown by two-thirds since 2005 and now represent 21 percent of all visitors to the county," the economists said.
They predict Maui's hotel occupancy rates will grow from 68.1 percent in 2010 and 70.3 percent in 2011 to just under 75 percent this year, and somewhat higher in 2013 and 2014.
The university economists said Maui's labor market was "the standout among counties last year, at least from an aggregate perspective."
They noted that Maui added 2.1 percent to its job base, which is more than double the statewide average of 0.9 percent growth.
"Most of this growth was centered in tourism-related areas, including accommodations and food services and the transportation and utilities sector, and there were weaker-than-expected conditions in a number of other areas," the economists said. "We expect stronger demand for labor across the broad local economy in 2012, with growth in the 2.8 to 3.9 percent range in transportation and utilities; finance, insurance and real estate; and the accommodations and food service sector."
They also predict more Maui County jobs in the other service sectors, health care and government.
"The hoped-for end to construction job losses failed to materialize last year, but the pace of losses declined substantially," the economists said.
Commercial construction permits in the county rose 60 percent in 2011, buoyed by a handful of hotel, agricultural and nonprofit organization projects.
Projects that have helped keep construction workers employed include the $16.5 million Courtyard by Marriott project near Costco in Kahului, the Kaheawa wind farm expansion, work on the 255-room Andaz Wailea Hotel (the former Renaissance Wailea Beach Resort) and A&B Properties' Maui Business Park II, a 179-acre expansion of industrial-zoned property near Kahului Airport.
Maui County was the only county that saw an increase in private construction permits awarded last year, the economists noted.
"We expect a turn to moderately strong job growth (in construction) over the next several years," they said. "Real estate markets remain weak, and residential building will only gradually get back on its feet."
The number of agricultural jobs grew in all counties, with Maui and Honolulu both posting increases of 8.5 percent.
The economists predict overall job growth of 2.1 percent this year, rising to 2.5 percent in 2013 and 2014.
"This will help drive further incremental improvements in the county's unemployment rate, which dropped by a full percentage point between December 2010 and December 2011, ending the year at 7.5 percent."
As part of a section of the report covering the expansion of alternative energy infrastructure, the economists point out that two of the three largest wind farm energy projects are on Maui - the Auwahi Wind project by Sempra U.S. Gas & Power and First Wind's expansion of its Kaheawa wind farm above Maalaea. The largest project is the 69-megawatt Kawailoa Wind farm on Oahu's North Shore.
They note that Ormat Technologies Inc., which owns and operates Puna Geothermal Ventures on the Big Island, is planning to drill exploratory wells on Haleakala's southwestern slopes to see if there are sufficient geothermal resources at the site. And, they point out that Hitachi is investing $37 million on Maui to test smart grid technologies.
The economists said the biggest risks to the county's economy include oil prices, Europe's debt crisis and a "poisonous domestic political climate."
"One can imagine that fears of $5 per gallon gas or of a debt calamity - perhaps fanned by presidential candidates - could undermine consumer confidence and slow growth further," they said.
Locally, the greatest uncertainty continues to be the timing and strength of the next construction upswing, the economists said.
"Because we have not yet seen a clear turning point on the Neighbor Islands, and in fact permitting remains at or near record low levels, there is certainly a possibility that it will take longer than expected for the next wave of activity to begin," they said.
* Brian Perry can be reached at firstname.lastname@example.org.