Hawaii’s economy performed slightly better than expected in 2024 and — with a red hot construction industry, in particular — should show even more gains for 2% growth in 2025, according to the latest economic data from the state Department of Economic Business and Development.

In the first quarter of the year, economists initially forecast that Hawaii’s economy would grow 1.5%, then lowered expectations to 1.3% in both the second and third quarters.

But in the new fourth quarter forecast released Wednesday, DBEDT said the economy will actually grow by 1.6% — and by 2% heading into 2025 and through 2027.

As industries continue to recover from the COVID-19 pandemic and August 2023 Maui wildfires, construction continues to stand out as a bright spot that will keep leading the economy as construction “continues booming,” DBEDT said.

“The main drivers for economic growth in 2025 will be construction, real estate and the continued recovery of tourism,” DBEDT said in its report.

But construction, in particular, “will be one of the main drivers for economic growth in the next few years,” DBEDT said.

There are no shortage of projects underway and coming up soon, including new ones like a proposed replacement for Aloha Stadium, final rail station and overhead rail guideway in Kakaako, a new Oahu Community Correctional Center, the rebuilding of Lahaina and construction of more housing, especially affordable units, according to Josh Magno, director of programs at Pacific Resource Partnership, the nonprofit advocacy arm of the Hawaii Regional Council of Carpenters.

PRP represents more than 6,000 unionized carpenters as well as over 250 signatory contractors.

The construction industry normally needs 4% to 5% new workers each year.

But with the demand so high, now it needs 10% more.

PRP wants to recruit new workers while also retaining experienced journeymen.

Teenagers right out of high school can “become a journeyman in four years and make $100,000 potentially while in your early 20s,” Magno said.

Other benefits of a construction career, Magno said, include not having to pay college tuition, take on student debt and have enough earning power to remain in Hawaii and one day buy a home.

PRP posted a recent video of an 18-year-old, diminutive woman who just graduated from Waipahu High School who already has joined the union as a carpenter’s apprentice.

But with increased demand for construction, local companies and crews also face competition from mainland companies who may bring in labor from the mainland.

If they do not hire local, unionized construction workers, then PRP will be watching to ensure they pay union rates and follow other requirements of a Project Labor Agreement that Gov. Josh Green signed in February specifying how construction workers must be treated and compensated.

For all economic sectors, according to DBEDT, “Hawai‘i’s overall economy was fully recovered to pre- pandemic levels by the third quarter of 2023. By comparison, the U.S. economy has been fully recovered since the first quarter of 2021.”

But some tourism-related industries, especially accommodations, transportation, retail, recreation and food services still have not fully recovered and collectively were at only 93% of pre-pandemic levels in the second quarter of the year, according to DBEDT.

For the first 10 months of 2024, overall visitor arrivals recovered to 92.8 percent compared to the same period in 2019.

But the numbers varied between tourists from different markets and which islands they visited.

International travel overall had recovered to 64% compared to 45% specifically for Japanese visitors, which both lagged Canadians’ visitor recovery rate of 77.9%.

Arrivals to Maui for the first 10 months of 2024 were 75.2% compared to the same period in 2019.

But arrivals to Oahu were at 94% compared to 2019 and up to 98.4% for Hawaii island while Kauai remained flat, according to DBEDT.

Other sectors continue to struggle compared to October 2019 before COVID arrived and all but shut down Hawaii’s economy in March 2020.

“Other than in Construction, Private Educational Services, and Health Care &Social Assistance, job counts in all other sectors were still lower than the levels in October 2019,” according to DBEDT. “Retail Trade lost the most jobs at 6,400, followed by Accommodations at 4,600 and Financial Activities at 3,400.”