Construction, finance, health care continue to fuel local economy

LIHUE — The Kauai construction industry, which grew by a staggering 14 percent last year, is one of many booming industries continuing to fuel the island’s strong economy, said one economist.

“Construction was way up last year,” said Dr. Leroy Laney, an economics professor at Hawaii Pacific University who conducts economic research for First Hawaiian Bank.

The information industry grew by 29 percent, and agriculture by 15 percent on Kauai last year, said Laney.

Data from the first four months of this year led Laney and fellow economist Dr. Byron Ganges, of the University of Hawaii at Manoa, to project continued economic vitality on Kauai for the rest of this year, and all of 2004.

Construction, finance, health care, and other service areas will continue to lead the economic surge, said Ganges, whose UH Economic Research Organization (UHERO) has been contracted by the County of Kauai Office of Economic Development to conduct economic forecasts for the island.

The next forecast is expected next month, and in advance of that Ganges and Laney met with local business and government leaders last week to get an idea of how things are going “on the ground” on Kauai, Ganges said.

Around 25 people showed up for the session, including Mayor Bryan J. Baptiste and County Councilmembers JoAnn A. Yukimura and Jay Furfaro.

The local economy continued to motor forward despite the fact that the island and state’s number-one industry, tourism, continues in a recovery mode, Ganges said. High-growth sectors, including state and county government with negotiated raises for union workers, are pulling up overall averages across the state, he commented.

Risks include security and diseases, as well as uncertainties in both the Mainland and Japan economies. “The Japanese market is most worrisome,” Ganges said.

And with winter cold and flu season only a few months away, he predicted that SARS, or severe acute respiratory syndrome, would be a problem outside Asia, where a majority of the new cases are being discovered now.

Construction growth, both in Hawaii and on Kauai, probably can’t continue at its current pace for too much longer, and will probably see a slowing once interest rates rise, he said.

Overall, though, the forecast for Kauai and Hawaii will remain upbeat, he said.

“Things feel different on Kauai” in the visitor industry, because it enjoys a longer length of stay than other islands, Ganges commented.

Kauai’s job market also looks much different than the state trend, and other counties, he continued. “You don’t have the negatives that we saw statewide” after Sept. 11, 2001.

“So, relatively speaking,” Kauai is projected to have “a healthier job picture” than statewide trends and what’s happening in other counties, Ganges said. He thinks job growth of 2 percent to 2.5 percent will happen this year.

“Things are looking a little more buoyant than we thought,” mostly because of the end of war with Iraq, he said. “The Japanese visitor has not rebounded” since the conflict’s end, as economists including Ganges had predicted.

“The income picture has been better than the jobs picture in the state,” with 2002, inflation-adjusted numbers showing income growth. “Our view is that will continue,” said Ganges.

“Kauai’s actually doing quite well,” and it’s hard to discern from data and anecdotal information that Kauai even went through any recession at all, as occurred around the nation and state, last year, on the heels of the terrorist events of Sept. 11, 2001, Laney said.

The island had a 1 percent job increase last year, with leisure and hospitality industry gains offsetting losses in retail, Laney added.

For the first four months of this year, the island job count is up 4.3 percent, ahead of the state rate of 3 percent and way ahead of the other counties, Laney continued.

“So we’ve got a really strong job rally going on. It looks like 2003 is of to a good start,” said Laney.

Business Editor Paul C. Curtis can be reached at or 245-3681 (ext. 224).


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