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A Look at Sectors of the Maui Economy

Hawai‘i economist says jobs, tourism, residential real estate and sugar continue to do well.

November 22, 2012
The Maui Weekly

According to First Hawaiian Bank's 2012-13 Economic Forecast report by Hawai'i Economist Dr. Leroy O. Laney, Maui is "No Ka 'Oi" among Neighbor Island economies.

Thanks to stronger job creation, a continued robust visitor industry and growing strength in construction, Maui is doing considerably better economically than the other Neighbor Islands.

For the past couple of years, one of the biggest underlying messages about the state economy, according to Dr. Laney, has been the contrast between the recovering tourism sector and lagging construction.

In 2012, for Maui at least, that message is changing. The following is a summary of four of the island's most important economic sectors.

JOBS

Jobs in each of Hawai'i's four counties peaked in December 2007, the same month the national economy entered recession, and the job count has been climbing out of the post-recession hole ever since.

At the deepest part of the Great Recession, Maui was bringing up the rear in job creation relative to other counties. Yet it has made the greatest strides since then. Its level of jobs is now only 6 percent below the 2007 peak.

The gap between Maui's jobless rate and the state rate has been narrowing steadily, the only Neighbor Island for which that is the case.

TOURISM

The Maui visitor industry continues to perform very well. The island's 2012 growth in visitor arrivals and spending doesn't look quite as spectacular as it did in the immediate snapback from recession.

Maui got its airlift back more quickly than Hawai'i Island and Kaua'i, so the fact that those islands are only now regaining their airlift makes their growth numbers now look stronger by comparison.

Still, in every measured category--arrivals, visitor days, length of stay, total spending, person per day and person per trip spending--Maui continues to be up from 2011.

There has been increasing airlift to Maui from Oakland, San Jose, Seattle, Sacramento, Bellingham, Monterey and Canada.

Maui's comparative advantage among Hawaii tourism destinations, as well as tropical destinations elsewhere, still resides in its upscale image and in the choice it offers--in accommodations, activities, cuisine and other components of a quality vacation.

So Maui can look forward to continued support from its main industry, even if other sectors falter due to external cyclical conditions in the future.

RESIDENTIAL REAL ESTATE

Maui real estate sales have picked up, as falling prices and lower mortgage rates increase affordability. It may be a buyer's market, but buyers who wait too long may lose the property. Inventories have declined almost 20 percent over the past year for both single-family and condo units.

Short sales and foreclosures are being absorbed as the market returns to normal.

The decline in median prices for both single-family homes and condos seems to be reversing, or at least leveling off. Well-priced homes attract multiple offers, and sellers are being advised by Realtors to get pre-approval so they can shop with greater confidence.

SUGAR

HC&S, the state's lone remaining sugar plantation, has survived mainly because of its size--35,000 acres. Its future is looking up some. HC&S sugar production has been rising in recent years. While production is still below its target of 200,000 tons a year, it seems to be getting there. The plantation has achieved this mostly by bringing more acres back into production.

Water availability is still a problem, and HC&S has suffered under what has turned into a 12-year drought. HC&S management emphasizes that in the future there is biomass energy creation, not food sugar.

The plantation provides 5 to 6 percent of Maui Electric Company's power, and it used to provide more than that.

 
 

 

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