A University of Hawaii economic forecast includes two key revisions both of which reflect signs that construction is ready to rebound, laying the foundation for a broader-based if still slow recovery.
The UH Economic Research Organization said in June that residential building permits would likely fall 4% this year. On Friday, it revised its forecast for a 4% increase.
In June, UHERO predicted a 15% plunge in non-residential construction permits. On Friday, it said there may now be no decline at all.
"A modest upward revision," the report said. "Evidence of stabilization." UHERO economists stressed that the underlying picture for the construction industry remains slow. Hundreds of Hawaii construction workers remain idle.
UHERO also noted that what improvement there is mostly on Oahu and the Big Island so far, adding that neighbor islands are held back by "pockets of overbuilding" and the slow return of offshore investors. Oahu has a housing shortage and lots of local demand.
For residential construction, a wild card is foreclosures. If banks do more foreclosing and quickly sell the homes they seize to get them off their books, it will release what UHERO calls "shadow inventory."
It will help that the Defense Department, with the federal government's budget year ending this month, has been awarding hundreds of contracts including major construction work on Oahu and Guam.
"We just picked up the $160 million hospital project on Guam, and it's a really big deal for us. A lot of subcontractors and vendors here in Hawaii will prosper from this," said Denny Watts, CEO of Watts Constructors.
Watts said he and his competitors will be getting more major projects from the federal and state governments in coming weeks, and they also hope to get work from Honolulu rail.
The Hawaii Department of Labor & Industrial Relations reported this week that there was a small increase in construction jobs in Hawaii during August. Construction jobs had been running consistently lower than year-before levels.