While the local timber industry continues to struggle, Flathead County has experienced overall wage growth surpassing the state’s average, economic analysts said Thursday at the 11th annual economic update in Kalispell.

Flathead County had a 9.3 percent wage growth in 2015, the second largest growth in the state just behind Gallatin County, said Patrick Barkey, director of the University of Montana Bureau of Business and Economic Research.

He said while there has been wage growth in the Flathead, it hasn’t happened in a typical way.

“Things are changing up here before our eyes. It used to be this was a wood-products area,” Barkey said. “But tourism has been flirting with taking over as the No. 1 industry here with health care following.”

Barkey said the wage and job growth for the county has been a long time coming since the 2009 recession stagnated traditional workforce drivers.

The annual economic update took place more than a month after Weyerhaeuser Co. announced it will permanently close its lumber and plywood mills in Columbia Falls by early September — meaning 140 jobs will relocate to Evergreen and 200 employees, including administrative staff and mill workers, will be without a job.

“That’s clearly going to be a challenge,” Barkey said. “But going into the future, the big story for the valley is one residents are familiar with — there are really strong demographics of people wanting to live here.”

He said attached to those people are greater demands for construction projects, business start-ups and health-care services.

The county’s wage growth most likely was spurred by an improving economy and businesses trying to retain and recruit workers, Barkey said.

According to the bureau’s research, Flathead County’s largest wage growth came from finance and business services — that increased from roughly $5 million paid in wages to county residents in 2014 to more than $20 million in 2015.

Construction and manufacturing jobs followed with the second largest wage increase, from less than $5 million in 2014 to more than $13 million the following year.

Meanwhile, Barkey said statewide wage growth has struggled due to 2016 starting out as a weak year for corporation revenue as well as a slump in coal, oil and gas revenue.

In 2015 Montana experienced a 3.5 percent overall economic growth. Before the recession, the state averaged a 3.3 percent growth.

“We’re predicting to see somewhere around a 2.5 percent growth for Montana in 2016, though that’s an early prediction. It could get lower or higher,” Barkey said, pointing to Montana’s predicted weak revenue growth as an underlying cause for slower economic growth.

Slowing the growth rate has been nearly a 29 percent drop in coal production, for an estimated 9.3 percent decrease in coal revenue. The bureau estimated a more than 53 percent decrease in oil and gas revenue for 2016 and a roughly 40 percent drop in corporation revenue.

While historic natural resource industries in Montana are struggling, health care is picking up.

Barkey estimated that by 2026, Montana will need 15,000 to 16,000 more health-care workers statewide. He said those jobs will appear as new health-care positions are created and as baby boomers retire.

It’s unclear, though, where the health-care workforce will come from — an issue the nation is facing, Barkey said. Part of the solution could be migration, technology improvements such as telemedicine and wage adjustments.

“But you have markets like Kalispell that are really doing better in terms of health-care expansion,” he said. “Health care is growing everywhere, but it’s growing faster here.”

Behind finance and business services, health-care jobs account for the largest amount of wages earned in the Flathead Valley at $20 million in 2015; that’s up from $15 million the year before.

Barkey said while the Kalispell health-care market has typically been secondary to Missoula, it’s growing faster due to an increased demand as more people choose to relocate in the Flathead. He said those people often come with money and the desire for services, from rehabilitation to specialist care.

He added that when it comes to recruiting doctors, the Flathead Valley isn’t a hard place to sell.

Barkey said he hopes to see what’s happening in health care expand across jobs in the Flathead.

“The valley certainly has had challenges and there are still concerns, but the message overall right now is that there’s been broad growth, and that’s good news,” he said.

Reporter Katheryn Houghton may be reached at 758-4436 or by email at khoughton@dailyinterlake.com.