UHERO: Hawaii construction growth will last years
Pacific Business News (Honolulu) - October 5, 2004
Construction contracts in Hawaii this year are almost double the level of 2001, and there are signs that both civilian and military construction will stay busy for years, according to the latest Hawaii Outlook report from the University of Hawaii Economic Research Organization.
"Construction in Hawaii is poised to continue growing," write the university's Carl Bonham and Bank of Hawaii's Paul Brewbaker, the report's authors. "Expectations for continued economic expansion and demand for new residential units are one source of the recent growth in combined private and public commitments to build."
The report predicts real personal income growth of over 3 percent in 2005 along with moderate job growth and continued low unemployment rates below 3.5 percent.
Military construction is the second support for growth. "Military projects will step up the construction growth trajectory to a higher level," the authors say. "As a result, the current construction cycle is looking more sustainable than the late-1980s cycle."
The combined value of private building permits and government contracts will rise this year to 90 percent more than the 2001 level of $2.3 billion, Bonham and Brewbaker forecast. "Most of this surge has unfolded during the last 12 months: combined building commitments totaled $2.99 billion during 2003, and a strong kick-off to federal military construction commitments in 2004 is expected to lift the combined total nearly 50 percent further, to $4.4 billion."
Construction "commitments" refer to spending most of which happens in subsequent years, which is why the economists can feel secure in predicting the level of actual building in years to come.
In terms of actual construction put into place, that dollar value topped $4 billion in 2002 and will well exceed $5 billion in 2005, Bonham and Brewbaker say.
This also means a larger construction work force. There were fewer than 25,000 people working in construction in Hawaii in 2001. This year it's more like 29,000. Next year the economists predict there will be a construction employment sector of 30,700.
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