Forecast: Construction jobs, ‘Project X’ welcome after ‘economic nightmare’

Central Valley Business Journal, January 2012

By KEITH MICHAUD/Business Journal Editor

STOCKTON – Construction jobs will grow at a “furious” rate in the region, continuing to fuel hopes that economic recovery, while slow, will continue.

According to the California and Metro Forecast for January conducted by the Business Forecasting Center of the University of the Pacific’s Eberhardt School of Business, “The Stockton (area) continued job losses in 2011, but will make a strong return to job growth in 2012 with a 2 percent increase. Total non-farm employment began increasing in the second half of 2011 and will strengthen further in 2012. The construction and mining sector is anticipated to begin adding jobs at a furious 11.8 percent pace in 2012 and 10 percent in 2013. The education and health services, leisure and hospitality, and trade, transportation, and utilities sectors will lead job growth in 2012 and 2013. We anticipate strong job growth of 2.2 percent per year over the next five years.”

Part of the construction surge will come as more workers are hired on to build the California Health Care Facility, Stockton, located off Arch Road east of state Highway 99. Builders expect construction will support nearly 5,500 construction jobs, including up to 1,700 construction workers per day on site. The Veterans Affairs Department is building a clinic and care facility in French Camp that will continue the surge in construction jobs. The state and federal facilities also will be hiring for health care workers. And the anticipation of a new distribution center in Patterson – for now dubbed “Project X” – did not escape the Pacific forecasters.

“The Stockton area will be bolstered as construction at the California Health Care Facility accelerates throughout the year, and continuing growth at the Port of Stockton catalyzed by investment in new cranes and container service to the Port of Oakland,” read a portion of the forecast released today. “Reports of a major new distribution center employing over 1,500 people coming to Patterson will bolster the outlook for Stanislaus County, but came too late to be incorporated into this forecast. The real estate market and local governments remain in turmoil and weigh heavily against the economy, keeping growth at modest levels. Nevertheless, any positive growth will be welcome after a four year economic nightmare in the (Central) Valley.”

The Business Forecasting Center projected that real gross state product will grow at 2 percent for both 2012 and 2013, similar to the first two year of the recovery. Growth will increase to about 3 percent in 2014 as housing and construction begin making positive contributions to the recovery, according to the report.

Real personal income also should grow about 2.3 percent in 2012, surpassing the pre-recession peak. Strong growth in real personal income will continue – 2.3 percent in 2013 and 3.7 percent in 2014. Unemployment is expected to fall from 16.8 percent in 2011 to 11.3 percent in 2016, slowed somewhat by growth in state population.

“After a flat 2011, we should finally see modest, positive job growth from Sacramento to Fresno in 2012,” Jeff Michael, the Business Forecasting Center director, said in the report.

Here are other highlights from the report.

  • California is two years into a slow five-year recovery.
  • California unemployment will decrease slowly over the next few years, dropping to 11.4% in the first quarter of 2012, and remaining above 10% until 2014.
  • Since Payroll jobs bottomed out in winter 2010, California has recovered 329,000 jobs; one of every four jobs lost since summer 2007.  Non-farm employment will recover its pre-recession peak in the first quarter of 2016.
  • Despite sluggish job creation, real personal income is expected to approach and exceed its 2007 peak in the first quarter of 2012 due to stronger recovery in non-wage income and higher wage jobs.
  • After 8 years of zero net job growth from 2007 through 2015, the state’s population will have grown by more than 3.3 million people, keeping unemployment near 8% at the end of 2015.
  • Growth in real gross state product is expected to increase steadily from 1.8% in 2011 to 3.6% in 2015.
  • 244,000 new Construction jobs are expected to be created over the next five years, about 22.3% of California’s total non-farm job growth. It is also anticipated to be the fastest growing sector in 2013, growing 4.9% or by 27,800 jobs.
  • 2011 brought the first annual increase in Manufacturing jobs in California in a decade.  The trend of gradual growth in Manufacturing employment is anticipated to continue.
  • The Health Services sector was the only private sector to experience consistent job growth throughout the recession, adding 75,600 jobs between 2008 and 2011.  It is expected to add another 139,300 jobs over the next five years, 12.7% of California’s total non-farm job growth.
  • Professional Science & Technology employment is projected to increase by 35,800 over the next year after adding 11,000 jobs in 2011.
  • State and local government employment, including public schools, shrank by 11,200 jobs in 2011 and will shrink by another 1,400 in 2012.
  • Multi-family housing starts are expected to rebound strongly in 2012, surpassing single-family housing starts for the first time.  Single-family housing starts are expected to once again overtake multi-family housing starts in 2013 with nearly 50,000 annual housing starts. Housing starts are expected to exceed 150,000 annual units in 2015, 40% of which will be multi-family housing starts.

The Business Forecasting Center at the University of the Pacific was founded in 2004. Housed in the Eberhardt School of Business, it produces quarterly economic forecasts of California and 10 metropolitan areas in Northern and Central California. The Eberhardt School of Business is one of a handful of business schools producing comprehensive quarterly forecasts of the California economy, and includes several regions not covered by other forecasts. In addition to the forecasts, the Center produces in depth studies of regional issues, and offers custom economic research services to public and private sector clients.

Bookmark and Share

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s