The U.S. aerospace and defense industry is poised to add 39,443 jobs in 2016, an increase of about 3.2% and the first job growth in the sector in five years, according to a study by Deloitte.

The anticipated growth will be driven by a rebound in the U.S. military market, which lost about 185,000 jobs over the last five years due to budget cuts and the drawdown of military forces in the Middle East, the report said.

The Pentagon’s plan to add $13 billion to its fiscal 2016 budget will help drive a 3.7% increase in jobs in the defense part of the sector, while low oil prices and strong travel demand should boost employment in the commercial sector by 1.8%, the report said.

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Employment in the overall aerospace and defense sector fell an estimated 0.8% in 2015, compared with a drop of 1.1% a year earlier, the report said. Overall, employment in the sector had dropped 9.4% since 2010, it said.

“The U.S. aerospace and defense sector continues to be one of the top employers in the U.S. economy, even with the five-year decrease in total employment,” Tom Captain, vice chairman, Deloitte LLP, and aerospace and defense leader, said in a statement accompanying the report.

“A return to growth will be healthy for innovation, product development and game-changing technology creation – a cornerstone of this industry,” he said.

The study showed that the aerospace and defense sector directly employed 1.2 million workers in 2014, and another 3.2 million workers who supported the industry in nearby communities.

Deloitte said the defense subsector had contributed heavily to the decline in the overall sector, shedding 18% of jobs since 2010. But that decline was partially offset by job growth of 17% in the smaller commercial aerospace sector.

The report said seven states accounted for half of all U.S. aerospace and defense sector employees: California, Washington, Texas, Florida, Arizona, Connecticut, and Kansas.

(Reporting by Andrea Shalal; Editing by Dan Grebler)