Georgia Southern’s Q3 Economic Monitor reflects improved economy, slowing expected

December 9, 2019

Georgia Southern University’s latest Economic Monitor, which analyzes Q3 2019 data and identifies trends affecting the regional economy, reports that the Savannah metro economy expanded during the third quarter of 2019, reversing a modest dip in the second quarter. 

“Growth in electricity sales and port activity boosted regional economic activity, offsetting some softness in retail sales and tourism,” stated Michael Toma, Ph.D., Fuller E. Callaway professor of economics. “Slowing growth through mid-2020 is expected, but the cautionary signal sent by the decline in the forecasting index should be monitored for potential intensification in upcoming quarters.” 

Regional Economy Posts Gains

The Savannah metro economy expanded 0.8% during the quarter. The coincident index of economic activity increased to 191.1 from 189.7. The index was primarily supported by strengthening port activity and strong sales of electricity to regional commercial, industrial and residential users. Modest increases in consumer confidence in the south Atlantic states and regional employment further lifted the index. While both retail sales and hotel and motel room rentals slipped, as compared to the second quarter, both indicators remain above year-ago levels. 

While the trade and tariff spat has disrupted Georgia’s trade with China and contributed to recent volatility in port activity, shipping through Georgia Port Authority’s facilities registered strong growth of nearly 9% when compared to the previous quarter. Port activity stands roughly 7% higher than year-ago data and remains on a long-term upward trend.

Employment Trends

Total employment in Savannah’s three-county metro area was 185,700, a gain of 200 jobs from the previous quarter. Employment is 1% higher than a year ago. Employment in business and professional services continues to erode, shedding another 700 jobs and falling below 20,000 workers for the first time since mid-2016. Overall, the sector has lost 2,700 jobs during the past six quarters. If this trend continues, it is likely to reduce total employment in the region, as increasing shrinkage in this sector becomes more and more difficult to offset with growth in other sectors. Business and professional services is a proxy indicator of business-to-business demand for services. 

The goods-producing side of the Savannah metro economy added 400 jobs in the quarter. An additional 200 workers in manufacturing brings the total number of jobs in the sector to 19,500, which is another record high. Employment in construction increased by 200 jobs to 8,900 workers, the highest number of workers since mid-2008. 

Hourly wages in the private sector held steady at $22.65 and appears to have reestablished stability after declining through much of 2018. The length of the workweek shortened slightly to 33.1 hours. 

Tourism

Tourism indicators were mixed again during the third quarter. After adjusting for seasonality, boardings at the airport increased 1.9%, while the number of visitors on organized tours modestly improved after a weak second quarter. However, alcohol sales taxes declined 5%, hotel and motel tax receipts fell 2%, and automobile rental taxes dipped slightly. Following an anomalous decline in the second quarter, total employment in leisure and hospitality returned to 27,400, the largest among the region’s major economic sectors. 

Forecasting Index Falls

The Savannah area business forecasting decreased for the first time since mid-2017. The index declined 0.5% after increasing 0.6% in the second quarter. There were mixed results in both the regional labor and housing markets.

In the labor market, the number of initial claims for unemployment insurance (UI) surged 30% from 405 from 540 in the third quarter. UI claims are 4.2% higher when compared to previous-year data. In better news, the seasonally adjusted unemployment rate fell one-tenth of a percentage point to 3.2%, roughly the same as its year-ago level. 

Housing

In the regional housing market, seasonally adjusted building permit issuance for single-family homes increased for the second consecutive quarter. Building permits issued increased 7.3% to 580 units from 540 units. However, average-valuation per single-family unit decreased 4% to $223,600 from $232,900. Building permit valuation per unit is 2% below comparable data from 2018. 

Hyeeun Shin provided research assistance.

The Economic Monitor is available by email and at the Center for Business Analytics and Economic Research’s website. If you would like to receive the Economic Monitor by email, please send a subscribe message to CBAER@georgiasouthern.edu. 

About the Indicators

The Economic Monitor provides a continuously updating quarterly snapshot of the Savannah Metropolitan Statistical Area economy, including Bryan, Chatham and Effingham counties in Georgia. The coincident index measures the current economic heartbeat of the region. The leading index is designed to provide a short-term forecast of the region’s economic activity in the upcoming six to nine months.

Georgia Southern University, a public Carnegie Doctoral/R2 institution founded in 1906, offers 141 degree programs serving more than 26,000 students through nine colleges on three campuses in Statesboro, Savannah, Hinesville and online instruction. A leader in higher education in southeast Georgia, the University provides a diverse student population with expert faculty, world-class scholarship and hands-on learning opportunities. Georgia Southern creates lifelong learners who serve as responsible scholars, leaders and stewards in their communities. Visit GeorgiaSouthern.edu.