Inland Northwest economy to build upon gains of 2017
-December 21st, 2017
Employers in Spokane County are projected to add jobs in 2018 at about the same pace they did this year. Meantime, business leaders in some sectors expect to build on this year’s momentum, while others are planning for activity to level off or slow.
Of course, at this time last year, many business leaders reported tempered enthusiasm about the prospects for 2017, and in many cases, industry performance exceeded expectations.
Inland Northwest economists say Spokane’s total employment is expected to increase next year by between 1.5 percent and 2 percent, or about 5,000 jobs. That hiring pace would be about the same as this year’s clip, as well as those in 2014 and 2015. In 2016, employers added 7,500 jobs, outpacing what has been the norm in recent years.
The health care sector has added about 1,400 jobs this year in the Spokane area, accounting for nearly 30 percent of all new positions. That’s about double the employment growth of the next fastest growing sector, education, which added 700 positions. Professional services added 600 jobs, and the warehousing-and-transportation sector contributed another 400.
Much of the anticipated growth in employment next year is expected to occur in the same sectors.
In Kootenai County, job growth is expected to occur at a slightly faster pace than in Spokane County, with one economist projecting a growth rate of about 2 percent. While health care employment is growing in the North Idaho county, the construction industry and advanced manufacturing sector are drivers of job creation there as well.
Due to historic low employment rates in both counties, employers are reporting difficulty finding skilled or qualified workers, and the tight labor market could slow job growth. While concerns about labor shortages largely had been relegated to the construction industry in recent years, employers across a number of sectors now have similar struggles finding strong job candidates.
As the construction industry grapples with workforce issues, the volume of Inland Northwest construction continues to increase. Through the first 11 months of the year, the city of Spokane issued building permits for projects valued at $486 million. That’s up from $413 million in permit valuations in the city during all of 2016. Many contractors say they won’t slow down over the winter because of the amount of work they have on the books for 2018.
One building industry executive reported that permitting activity for new homes and apartment complexes has declined this year. Sales of existing homes in the Spokane market, however, are approaching record highs.
Through the first 11 months of 2017, the Spokane Association of Realtors reported about 7,480 home sales through the Spokane Multiple Listing Service, up from about 6,930 sales during the year-earlier period. The association projects sales at year-end to be 8 percent higher than the full-year 2016 figure of about 7,570 transactions. It also is projecting a 4 percent increase in transactions in 2018, which would put it closer to the record number of sales—8,370—reported in 2006.
Home prices have increased along with sales. Median homes sales price through November came in at $210,000, up nearly 8 percent from the year-earlier period.
In the commercial real estate market, industrial space remains hard to come by, with vacancy rates at 2.2 percent as of late this year, down from 4.3 percent a year earlier. While commercial brokers reported strong years in terms of transaction activity, the office market remained somewhat soft, with a 16.6 percent vacancy in downtown’s Central Business District, which was up a percentage point from a year earlier.
Brokers are forecasting a better year in 2018 and hope that office vacancies decrease, though they don’t expect the office market to become as tight as the industrial sector anytime soon.
A number of new stores have opened in the Spokane area in the past year, and one Spokane economist estimates that retail sales have grown by between 6 percent and 7 percent this year. One municipality is projecting—for its own budgeting purposes—that retail sales will increase by 5 percent next year.
Spokane-area bank and credit union executives remain mostly bullish about the coming year. But as was the case last year, the finance industry is concerned about the potentially dampening effect of rising interest rates.
Concerns about a rising interest-rate environment didn’t appear to result in any sort of slowdown in the finance sector this year, however. Executives here consistently reported gains in net-interest income, as well as in net loans and deposits, and many are projecting similar growth in 2018.
The health care sector remains in a growth mode, with organizations continuing to partner and merge despite ebbs and flows in uncertainty surrounding the prospect of changes to the Affordable Care Act.
MultiCare Health System, of Tacoma, Wash., completed its $425 million acquisition of Spokane-based Rockwood Health System midyear, and Providence Health Care, of Spokane, transitioned following its parent’s merger with Irvine, Calif.-based St. Joseph Health last year.
Providence now is partnering with Kirkland, Wash.-based Fairfax Behavioral Health to develop and operate a 100-bed psychiatric hospital on the lower South Hill. That facility is expected to open next fall.
One health care executive here contends Eastern Washington is evolving into a training and education hub for the sector and garnering attention from outside of the region for its quality of care.
Meantime, tourism promoters here say the Spokane area is attracting larger groups than it once attracted, and the city will host a strong slate of conventions next year.
In addition, 2018 is expected to be a banner year for sports tourism, with a handful of national sports competitions to be held here. Those events are expected to have a total economic impact of $63 million next year, up from an estimated $54 million sports-tourism impact this year, according to one source.
The anticipated increase in visitor activity would build upon three years in growth, following the expansion of the Spokane Convention Center and the opening of the Davenport Grand Hotel.