1. UHERO RELEASED ITS ANNUAL CONSTRUCTION REPORT THIS MORNING. THIS IS A SECTOR THAT HAS BEEN HARD HIT BY THE GREAT RECESSION ISN’T IT.
That’s correct, from a peak of just under 40,000 construction jobs in February of 2008, the industry has shed 12,000 jobs, and continued to loose jobs during 2011. And, total inflation adjusted spending on construction projects fell 33% from 2008 to 2011.
2. SO IS THERE ANY GOOD NEWS IN THE REPORT?
Construction has not yet turned the corner in Hawaii, but a pickup is now more clearly in sight. There is still very little in the way of construction of single family homes. New high-rise condos, retail, and resort-related development are likely to boost activity, and assuming that the Honolulu rail project proceeds as planned, that too will add to construction spending and jobs. Overall, we expect real construction spending to increase by nearly 10% this year and almost 15% in 2013.
3. THAT SOUNDS PRETTY GOOD, WHY SO MUCH GROWTH?
Building activity always goes through large cycles. After a statewide building boom in 2004-2008, building activity fell to record lows in the past three years. As the overall economy begins to grow we will start to an see an increase in household formation and demand for housing. But, we are building almost no housing, so the increased demand will eventually outstrip supply leading to rising prices. And, rising prices will set the stage for an increase in supply, in other words more building activity. Even with our somewhat optimistic forecast for growth over the next three years, in 2014 the statewide construction job count will still be nearly 13% below its 2007 peak.