The Savannah metro economy posted subdued growth in the third quarter of 2023, following a slight decline in activity in the second quarter, according to Georgia Southern University's Q3 2023 Economic Monitor.
“The increase was supported primarily by growth in regional employment, electricity sales and port activity,” said Michael Toma, Ph.D., Fuller E. Callaway Professor of Economics at Georgia Southern. “The tourism industry made a modest contribution, but retail sales declined during the quarter.
Prospects for stronger growth through mid-2024 will depend on hiring targets at the region's major manufacturers. Hyundai Motor Group Metaplant America and its affiliated suppliers will drive a significant portion of the growth in the manufacturing sector. “In addition, Gulfstream will also drive job growth in the high-wage manufacturing sector as the company adds 1,600 new workers.”
Employment trend
Metro Savannah employers added 1,800 new workers during the quarter, increasing total employment to a record high of 204,300. Most of the growth has been in the services sector, but manufacturing continues its steady upward trend dating back to early 2021.
The services sector added approximately 1,600 jobs, with most of the new workers concentrated in the hospitality sector (+500 jobs) and the education/health sector (+500 jobs). Notably, the business and professional services sector added 300 workers and, after the 300 in the second quarter, began a reversal of job losses in the last four quarters. This sector serves as a model and the recent increases are due to the slight increase in business-to-business activity in the region.
In contrast, retail laid off 300 workers, broadly representing a 1.2% decline in retail sales. Taken together, education and health remain the sector with the most jobs in the region, with 29,400 workers, closely followed by tourism with 29,300 workers.
Activity in the regional logistics industry is returning to normal after two exceptionally strong years that were heavily influenced by the pandemic. During the pandemic, consumer purchasing behavior shifted towards goods rather than services, which was reflected in significantly increased container traffic through the port. As consumer purchasing behavior began to normalize in the post-pandemic period, port activity also increased. In 2023, container traffic at the port basically returned to the country's best pre-pandemic growth trend.
The sector added 100 new jobs during the quarter and employs 18,300 workers, up 12% from its pre-pandemic peak. The Georgia Ports Authority has planned $4.5 billion in port infrastructure investments over the next 10 years as logistics space is expected to double, creating additional jobs and related business opportunities.
The goods producing side of the economy grew moderately over the quarter. Manufacturing employment increased by an average of 200 workers for the quarter to 19,900 and reached 20,000 workers in September. The manufacturing sector has added an average of 200 workers per quarter over the past three years and is on a steady growth path that is expected to increase through 2024 and into 2025 as hiring increases to meet announced job creation and investment at Gulfstream, Hyundai and their affiliated companies to cover suppliers. Employment in the construction industry remained stable at 9,500 jobs.
Adjusted for inflation, private sector wages fell to $24.61 an hour during the quarter, a 2.5% decline from $25.25 in the previous quarter. The length of the working week in the private sector decreased by 1.3% (approximately 24 minutes) to 31.9 hours.
In the labor market, monthly initial unemployment insurance (UI) claims rose 9.8% to 796 from 724 in the previous quarter. That's 12% more than the average of 705 per month over the last 12 months. The regional unemployment rate remained stable at 3%, the average so far for all of 2023.
Real estate market
The issuing of building permits for single-family homes increased by 11.2% compared to the previous quarter. The upward trend to 645 permits is slightly above an anchor value of about 575 permits issued per quarter since the start of 2019. The average value for each single-family unit increased 2.2% to $263,200 from $257,500 in the previous quarter.
In conclusion, the regional forecast index continues to send a signal that economic expectations should be moderated until mid-2024. However, the regional economy's resilience in reabsorbing laid-off workers, sustaining employment growth and maintaining a low unemployment rate in the face of restrictive monetary policy and elevated interest rates is notable. In addition, the increase in employment at Hyundai Motor Group Metaplant America, its suppliers and Gulfstream will offset the negative signal of the forecast index and propel the regional economy to show strength into 2024.
The medium- and longer-term prospects for the Savannah Metro economy remain excellent as the manufacturing and logistics sectors expand significantly through 2024 and over the next two to three years.
Comments are closed.