Broad-based job growth foretold positive gains in many sectors of the Inland Northwest economy this year, and those industries are expected to continue to grow in 2016, though some might not be able to sustain the trajectory established this year.
While many sectors are expanding, a couple of staples of the local economy, agriculture and mining, have suffered from price drops and are keeping a watchful eye on commodity and metal price trends going into the new year.
Job growth exceeded expectations this year, with Inland Northwest employment surpassing pre-recession levels about a year earlier than anticipated. The Spokane-Spokane Valley Metropolitan Statistical Area gained roughly 6,000 jobs this year, and the annual average unemployment rate in the MSA dropped slightly to an estimated 6 percent, from 6.2 percent the previous year.
One Spokane-based economist estimated that jobs increased 3 percent throughout the Inland Northwest this year, which was well above the 1 percent to 1.5 percent projected growth clip. While employers added jobs faster than expected and remain upbeat about hiring, observers say it might be difficult to maintain this year’s job growth pace. Economists here are projecting job growth next year in the range of 2 percent to 3 percent.
The job market proved to be even tighter on the Idaho side of the Washington-Idaho state line, with Kootenai County posting a 4.8 percent jobless rate in November and experts there projecting that unemployment would remain between 4 percent and 5 percent.
In the Spokane-area real estate market, homes sales surged and prices increased, while the inventory of available homes decreased, all signs of a healthy market, real estate experts say. Homes sold through the Spokane Multiple Listing Service neared 6,300 at the end of November, an increase of nearly 18 percent compared with the year-earlier period, and could crest 6,700 by year’s end. One longtime market observer expects home sales to increase again next year and said total annual sales might break the 7,000-home barrier by 2020.
In the commercial real estate market, brokers and appraisers here report that vacancy rates are falling as leasing activity picks up. Some expect more demand for space in pockets of the Spokane area, including the Regal Street corridor on the South Hill, the Newport Highway area north of Spokane, and the periphery of the city’s core.
Some commercial contractors report an increased backlog in projects heading into the new year. While private-sector work has kept builders busy in recent years, a new wave of public-sector jobs is slated to hit the Inland Northwest in coming years. That work includes multimillion-dollar projects in Spokane Public Schools, Central Valley School District, on the north-south freeway, and at Riverfront Park.
The completion of a couple of large downtown projects this year—the Davenport Grand Hotel and the Spokane Convention Center expansion— have helped boost business and leisure travel to the region. Most tourism experts expect visitors and visitor spending to increase this year.
However, sports tourism might decrease slightly, despite plans to host first- and second-round games here for the NCAA men’s basketball tournament in March and the inaugural Team Cup Challenge international figure skating event in April.
Homebuilders are projecting gradual growth in activity, though one longtime builder said it has presold just over a dozen lots and has a strong book of business going into the new year, suggesting that it will build more houses in 2016 than it did this year.
Home starts are a big indicator of health in the wood products industry, and forecasts in that industry this year track closely with those of the homebuilders. One market observer expects demand for wood products to increase slowly, though continue to fall short of pre-recession activity levels.
A strong U.S. dollar, compared with the value of currency in other countries, and economic struggles abroad—China specifically—could cloud those projections for slow growth, that observer says.
In the finance sector, the Federal Reserve’s anticipated increase in interest rates is expected to improve net-interest margins—and increase revenues—for Inland Northwest banks and credit unions. Those institutions, however, say they could see somewhat softer demand for loans next year as interest rates rise.
Higher interest rates might put a damper on retail sales in the upcoming year, specifically on car lots. For now, however, the industry is projecting growth in sales into the new year.
Change remains the key constant in the Inland Northwest health care sector. Providence Health & Services, which includes Spokane-based Providence Health Care, has reached an agreement with another Catholic-based health system, St. Joseph Health, to combine into a single network that would span from Anchorage, Alaska, to Lubbock, Texas. Plans for that merger are expected to be firmed up early next year.
Also, national health-insurance giant Kaiser Permanente announced earlier this month that it has agreed to acquire Group Health Cooperative, the Seattle-based insurer that covers about 113,000 people in Eastern Washington. That acquisition is expected to take a year to complete.
In the mining industry, prices for gold and silver fell again in 2015, the fifth consecutive year of declines. While industry leaders projected a turnaround in prices this year, they’re taking a more conservative approach to their predictions for 2016, hoping for price increases but not expecting them.
The agriculture market is facing challenges of its own, observers in that sector say. Wheat growers faced harsh weather conditions this year, with higher-than-normal temperatures and low precipitation levels. Growers are hopeful for more favorable conditions in 2016, with some suggesting that heavy precipitation in early December was a promising start.
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