The Savannah Metro Economy’s growth slowdown continued for the fifth consecutive quarter, according to Georgia Southern University’s latest Economic Monitor, reflecting the fourth quarter of 2022. Nevertheless, the prospects for the region are excellent.
“The outlook for 2023 remains relatively healthy due to continued growth in the regional logistics industry and related real estate development,” said Michael Toma, Ph.D., Georgia Southern’s Fuller E. Callaway Professor of Economics. “In addition, the ramp-up for the 2025 Hyundai Metaplant opening will be more apparent in 2023. These factors are expected to protect the Savannah metropolitan area from the widely predicted 2023 nationwide recession.”
Moderate growth in the region
The business index for the Savannah metropolitan area economy rose 0.6% in the fourth quarter of 2022. The growth path continued to slow after the hectic period when the economies of Georgia and Savannah surged in 2021. Economic activity in the Q4 index rose to 213.6 from 212.4, supported by eg employment growth, electricity sales, retail sales and airport boardings. Trends in hotel rooms and short-term vacation rentals as well as port activity played a lesser role towards the end of 2022.
employment trends
Metro Savannah employers added 1,200 new employees to 201,800 in the quarter. This is 3.8% higher than employment a year ago and 5.6% higher than the pre-pandemic peak in early 2020.
Employment growth was concentrated in the service sector. Leading subsectors included Leisure/Hospitality (+900 jobs) and Education/Health (+700 jobs). Business and professional services lost 100 employees and were only slightly above the prior-year level. Logistics employment increased by a further 1,000 jobs to 19,100 workers in support of port and distribution activities. Business and professional services, education, health and tourism remained the top three sectors in terms of employment. They were remarkably balanced with all three sectors within 400 workers of each other with approximately 27,600 employees in each sector.
Regional tourism industry indicators improved slightly in the fourth quarter. Seasonally adjusted sales tax revenue for hotels and motels increased 10%, while airport boarding was flat compared to the third quarter. Rental car taxes fell 1.1%, but alcohol sales (especially wine) during the holiday season rose 8%, even after adjusting for the usual seasonal pattern. Employment in tourism and hospitality rose to 27,800, entering full post-pandemic mode, 2% higher than the pre-pandemic peak.
The manufacturing side of the economy was flat during the quarter. Construction employment rose by 100 workers to 9,000, just 1,000 workers short of the amount needed to support the rapid pace of housing construction in the run-up to the Great Recession. Employment in manufacturing was flat at 18,800, up about 4% for the year.
Upward pressure on private sector wages eased as the tightening of the labor market eased. The inflation-adjusted average hourly rate in the metro area’s private sector was $26.56, up 1% for the quarter. Over the year, wage pressures eased from 15% growth to 10% growth before adjustment for inflation. The private sector work week shortened marginally to 32.3 hours, reflecting a 0.5% decrease from the previous quarter.
Housing market volatility remains the buzzword for single-family housing construction. The seasonally adjusted number of dwellings approved for construction rebounded 16%, continuing a trend of significant increases and decreases anchored since early 2019 with around 575 permits issued each quarter. The number of permits issued increased to 537 in the fourth quarter from 463 in the previous quarter. However, the average appraisal for each family home fell 10% from $291,600 to $262,400 and is expected to fall further into the first quarter of 2023.
As for the forecast indicators of the labor market, the number of monthly initial claims for unemployment insurance (AV) fell by 22% to 590 from 755 in the previous quarter. While this is good news, the number of new UI applications over the past six months has averaged about 670, well above the pre-pandemic low of about 500 per month. The regional unemployment rate remained steady at 2.7%, declining from 3% at the end of 2021.
Savannah Metro Economy Remains Favorable Even as the outlook for the national economy softens in 2023 and the regional forecast index is trending down, expectations for the Savannah Metro Economy remain favourable. In the Savannah region, a US recession in mid to late 2023 is likely to result in a slowdown in regional economic activity rather than a significant contraction.
This protection from a nationwide recession is made possible by continued investment by the Georgia Ports Authority, growth in the logistics industry and accompanying development of non-residential and residential communities. As more announcements pile in from Hyundai suppliers (now six firms employing 4,500 people and $2 billion in investment) adding to the 8,100 jobs and $7-8 billion in investment at the Metawerk itself, residential and Non-residential investment continued.
Editor’s note: The Georgia Southern Economic Monitor “provides a continuously updated snapshot of the economy of the Savannah metropolitan statistical area, which includes Bryan, Chatham and Effingham counties. For more information, see https://research.georgiasouthern.edu/big/big-programs/cbaer/economic-monitor-newsletter/
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