Mainebiz

V O L . X X I I I N O. X V I 32 FA C T BO O K / D O I N G B U S I N E S S I N M A I N E B U S I N E S S R E S O U R C E S M aine's economy has sectors that stand out for their success as reliable mainstays, others that are up-and-comers, and some that are lagging. Measures of Growth 2017, a report produced by the Maine Development Foundation for the Maine Economic Growth Council, highlights top sec- tors as real estate, government (federal, state, local, public education), health care and social assistance, manufacturing, and retail trade — accounting for 60% of Maine's GDP in 2015. We asked economists for their observations and found that, beyond the top-sector rankings, success stories include exports, food and beverage-related industries, tourism and hospitality, health sciences and services, and professional and technical services. Trending up are renewable energy and innovation around the wood products industry. Hard-hit sec- tors include traditional paper mills. Exports are booming Exports of Maine goods are up nearly 5% from 2015 to 2016, compared to a national average that has declined by 3.3%, according to Measures of Growth. In that period, Maine saw a 27% increase in lobster and seafood exports, significant growth from the aero- space and defense industries, and solid performances from a number of other industries and products. Seafood, led by Maine's lobster shippers and processors, continued to be the state's largest export commodity at $565 million, a record-setting perfor- mance for the industry. e Maine International Trade Center's outgo- ing president, Janine Bisaillon-Cary, earlier this year told Mainebiz a surprising growth area is gums and thickeners used in pharmaceuticals, nutritional additives, toothpaste and foods, with exports up 1,500%. Other fast-growing exports are blueberries, value-added and prepared food products and iron and steel products. A slump in worldwide pulp prices and the loss of production due to mill closures caused a 15% decline in GDP from 2015-16. Nonetheless, forest products remain Maine's largest export, with wood, pulp, paper and lumber totaling an aggregated $626 million. Real estate is on a high Maine's real estate sector is at its highest point in 11 years, according to the Maine Real Estate & Development Association, which in May issued the MEREDA index, an industry metric that measures the health of the market. The report's findings, on real estate activity since December 2016, include: e commercial market grew almost 9%. Lease rates and square footage were strong over that period, although the volume of commercial trans- actions and sales price per square foot were weak. In the residential market, sales of existing units and the median price were strong, but permits for new units dropped by nearly 17%. Construction employment grew almost 9%, and there's strong demand for new construction proj- ects to go online. Health care growing — with caution Health care is seeing growth due to an aging popu- lation, says economist Charles Lawton. With the industry's fate at least partly in the hands of state and federal budgets and policies, the current climate of uncertainty could limit that growth. "In many cases, health care workers are tremen- dously in demand simply because, at the moment, there's still private insurance and Medicare and Medicaid. But to the extent that's not fiscally sus- tainable, that demand will be at risk," Lawton says. Nevertheless, because of the state's aging demographics, growth is slow. Looking at 2010-15 data from the U.S. Bureau of Economic Analysis, University of Maine economics professor Todd Gabe says Maine's employment in the health care and social assistance sector ticked up 2% from 2010- 15, lagging well behind the national rate of 12%. "Part of the reason for Maine's slower growth is that the state already has an abundance of these types of jobs," Gabe says. "Aging in Maine is a little ahead of the U.S., so it's no surprise we started with more jobs in healthcare and social assistance." Hospitality growing, but slower than U.S. Tourism is booming, with the industry capitalizing on Maine's natural resources. "A lot of people value what Maine has to offer — the pristine environment, small communities, authentic experiences," says Ryan Neale, Maine Development Foundation's program director. "I think that will continue," adds Lawton. "I think it's important to try to attract tourists not only to Acadia and the major midcoast and southern beach locations, but to the interior lakes and state parks." What's hot, what's not A look at what is growing and what is not in Maine's economy B y L a u r i e S c h r e i b e r C O N T I N U E D O N PA G E 3 4 » MAINE'S REAL GROSS DOMESTIC PRODUCT BY MAJOR INDUSTRY SECTOR, 2015 Industry sector GDP (in millions) % of total % change 2014-15 Real estate $7,804 15% 0.20% Government $7,080 14% 0.10% Health care and social assistance $6,027 12% 2.60% Manufacturing $4,883 10% – 1.60% Retail trade $4,450 9% 2.30% Wholesale trade $2,912 6% 3.70% Finance and insurance $2,681 5% 0.10% Prof., scientific, technical services $2,662 5% 3.80% Construction $1,905 4% 1.20% Accommodation and food services $1,939 4% 0.90% S O U R C E : Bureau of Economic Analysis/Measures of Growth 2017 S O U R C E : Maine Department of Labor Center for Workforce Research and Information/Measures of Growth 2017 EMPLOYMENT IN MAINE BY TOP 10 SECTORS, 2016 103,600 employees 100,100 82,000 65,500 65,200 50,700 30,900 27,400 21,700 21,700 Financial activities Retail trade Health care and social assistance Educational services Leisure and hospitality Construction Professional and business services Government Other services Manufacturing

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