Uptick in construction, service-providing helping improve unemployment rate

Editor’s note: This is the second part in a two-part series on Hawaii Island’s job industry. Today’s story looks at the rebounding construction industry.

Hawaii County in November continued to notch the highest rate of unemployment in the state.

However, an uptick in construction and service-providing — which encompasses a variety of industries such as retail trade, education, government and leisure and hospitality, among others — helped push down the Big Island’s unemployment rate to 4.1 percent in November.

About 200 jobs, with about 100 of those jobs going to specialty contractors, were added in the construction sector, which tallied 3,100 positions during the month of November, up from 2,700 at the start of the year, according to state labor statistics released last week. In 2006, before the economic downturn beginning in 2008, there were about 5,600 construction-related jobs on the Big Island.

“We do think the number of (construction) jobs on the Big Island is actually higher,” said Bill Kunstman, Department of Labor and Industrial Relations spokesman.

The number might be low because some workers are reported under the private service provider sector, and some companies’ payrolls fall outside the county, resulting in the positions being counted elsewhere in the state.

At Big Island Electric, president Kristy McKellen said her 20 employees, which include four office staff, have been pretty busy for the past couple of months, including work on the Kona Community Hospital Emergency Room renovation project. Since October, she’s brought on two electricians, which are specialty contractors.

“There’s plenty of projects out there to bid on,” she said, adding she has projects lined up for the next four months. “It’s going upward, but I don’t know for how long.”

Melchor Construction general contractor Sonny Melchor, who was working on his own 2,400-square-foot new home Friday in Hualalai Vistas, said he is seeing more of the construction occurring on the high-end of the market, at homes valued more than $1 million. He also is seeing a good number of remodels after people purchase foreclosures and less expensive homes.

Nonetheless, the situation has “definitely improved” from a couple of years ago, said Melchor, who has been through similar economic cycles since entering the industry in the 1980s in Hawaii.

“It’s getting there,” he said, “if not, it’s going to go past (where it was).”

Hawaii County’s Planning Department authorized 482 building permits in October, the most recent month for which statistics were available.

That is a 5 percent increase from the month before; year-to-date permit numbers are nearly 12 percent higher than last year. The value of building permits issued through October was $659.3 million, about 21 percent higher than the value of the permits issued during the first nine months of 2014.

Year-to-date compared with 2010, the value of building permits issued is up more than 89 percent from $348.2 million while the number of permits authorized is up 85 percent, according to county statistics.

Jack P. Suyderhoud, a professor of economics at the University of Hawaii at Manoa’s Shidler College of Business and economic adviser to First Hawaiian Bank, in his economic forecast issued in October said tourism and “rebounding residential construction will lead the way” in 2016.

“Other data, including the permit data, are pointing in the right direction. And if you drive around and keep your eyes open, you’re also seeing positive signs. Things are happening,” he said Friday.

“We’re certainly going to see continuing activity at the current levels and the data seem to suggest that it’s going to go up slightly. If we believe permits are forward looking, I’m still somewhat optimistic.”

However, the outcome of the $1.4 billion Thirty Meter Telescope project, which is currently on hold after the state Supreme Court ruled Dec. 2 the state Board of Land and Natural Resources violated due process by voting to approve the permit in 2011 before a contested case hearing was held, could have an effect on job numbers.

“It’s pretty clear if TMT is deferred, then one of the consequences of that is you’re not going to get the construction jobs that would have been observed in that activity,” Suyderhoud said.

Also making a dent in unemployment was the private service-providing sector, which covers an array of industries including trade, transportation and utilities, education, leisure and hospitality and other services. The sector saw a net gain of 500 positions during November, state data showed.

The largest gain was seen in the retail area, of which about half of the 400 positions added were within department stores.

“We’ve been hiring throughout the season, we have not stopped hiring,” said Roger Thomas, Kona Target store manager.

Some of the positions are temporary, but the company plans to keep some folks.

“I think the biggest challenge is there is just a lot more jobs than there are people,” Thomas said.

Still, with about 4.1 percent of the island’s 86,500-person labor force out of work during November, Hawaii’s southern-most island continues its historical trend of fairing worse than Honolulu City and County, Maui County and Kauai County, which recorded unemployment rates of 3 percent, 3.4 percent and 3.9 percent, respectively. Statewide, the seasonally adjusted unemployment rate was 3.2 percent in November.

The Big Island’s rate is down from 4.2 percent in October and a percentage point from the year prior, however.

The island last saw 4.1 percent unemployment in February 2008. Unemployment reached its peak in June 2009 when 11.2 percent of the workforce was out of work. It has been on a downward trend since late summer 2011.

“I’m optimistic (about 2016) because the two drivers of the economy are looking positive — tourism and construction,” Suyderhoud said.