Posted on: Wednesday, April 6, 2005

Construction still looking up

Advertiser Staff

Hawai'i's construction industry will continue expanding, adding more jobs and money to the local economy, according to an economic forecast released today.

Statewide construction jobs grew 4.9 percent last year to roughly 29,300 jobs, according to a report from the University of Hawai'i Economic Research Organization and Bank of Hawaii. Jobs are expected to increase 6.5 percent to 31,200 this year and grow another 3.1 percent next year.

The continued growth in Hawai'i's construction activity, which has strengthened in the past seven years, will represent the longest uninterrupted expansion since the 1960s, wrote UH economist Carl Bonham and Bank of Hawaii chief economist Paul Brewbaker.

"More modest growth in construction activity during the current expansion, along with uneven participation across residential, nonresidential and public sector construction, has set the stage for a more prolonged expansion than in prior cycles," they wrote. "Still, the investment cycle is alive and well."

Contributing to the industry gains is moderate but steady local economic expansion, stronger population growth, a "seemingly insatiable appetite" by out-of-state second-home buyers for resort properties here, and low interest rates, the report said.

The report also notes that the primary reason they predict the rate of construction growth will slow is their expectation that Hawai'i home prices will stop climbing.

Contracting receipts will reach nearly $5.5 billion this year — up 11 percent over last year — in part due to the privatization of military housing. Growth will slow to a more modest 5 percent next year.

The number of private construction permits and government contract awards will fall 13.9 percent this year, following a robust 37.7 percent growth last year. But permits and government contracts will pick up 8 percent next year.

An executive summary of the report is at uhero.isdi-hi.com/forecasts.jsp. The full report is available only to UH Economic Information Service sponsors.