Construction grew in Hawaii last year after five consecutive years of contraction, according to a new forecast by the University of Hawaii Economic Research Organization (UHERO).

The group sees “impressive gains” in private building permits, but acknowledges the gains are arising from “very depressed levels.”

UHERO says home building, retail and visitor industry upgrades, the ongoing boom in photovoltaic installations and the rail project will drive industry expansion over the next several years.

Residential construction picked up last year and is projected to increase sharply in 2013 and 2014, though it is not expected to reach the levels of the last home-building peak.

The value of nonresidential permits will grow more than 25 percent this year after a surge of 50 percent in 2012. The number reflects a large upward revision from last year’s UHERO forecast, coming mainly from the photovoltaic industry. However, commercial construction also is growing.

With the exception of rail, publicly financed construction will only be a “middling” contributor to growth over the next several years, UHERO said.

Public contracting will slowly edge back up toward the $1 billion per year level, but that is not enough to “make a meaningful dent in the state’s public infrastructure shortfall,” the economists found.

http://is.gd/UHEROConstruction2013