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Savannah Economy Levels Off in Q3, But Continued Expansion Expected
Savannah Economy Levels Off in Q3, But Continued Expansion Expected
Armstrong’s Coastal Empire Economic Monitor summed up Q3 with this assessment and forecast:
“the coincident index of economic activity suggests that Savannah’s economy leveled off during the third quarter. In some ways, this is an artifact of the data in which it was difficult to sustain the exceptionally high previous growth rates in port activity and tourism. In that sense, it is less troubling, especially given the positive momentum in total employment growth and the continued increase in the forecasting index that maintained its signal of continued economic growth for the region. As it stands, expect continued expansion in the Savannah metro economy through mid-2016, perhaps with some moderation in growth as compared to the previous year”
The Savannah economy slowed down somewhat in Quarter 3, at least compared to previous growth rates. But, is his a big concern? Michael Toma’s forecasting mode, says not really. His optimism is spurred by the fact that the Leading Index which gauges future economic activity is still trending upward.
Good News for Q3
On the bright side, Savannah’s economy saw solid gains in total employment and consumer confidence. However, port activity, retails sales, and plane boardings trended down, which has not been the case of late. Electricity sales held steady, as did hotel sales, but the net effect of these trends kept the Coincident Index (which measures current economic activity) flat.
Savannah’s Economic Expectations Tempered Some
Even though the Coastal Empire leading economic index did rise, it did so at a “a slightly slower pace than the second quarter.” This caused the Economic Monitor to downgrade earlier projections a bit. However, the Coastal Empire’s economy should still end the year on a positive note. Bottom line: Savannah’s economy should keep growing into the mid-point of 216, but a little less than what was originally expected.
“The Coastal Empire coincident economic index was level, holding steady at 171.8 (see chart). After averaging a 1.3% annual pace for the previous three quarters, growth slowed to zero in the third quarter. Growth in total employment provided most of the lift to the index, while increases in consumer confidence in the south Atlantic states also played a supporting role. However, seasonally adjusted retail sales did not rise with consumer confidence, and in fact, fell about 10% from the previous quarter and remain 4.7% below year-ago sales, after adjusting for inflation.” – Economic Monitor
Why Port Activity Slowed Down
Port activity which had been a primary driver of Savannah’s economic growth underwent some important changes in Q3. Labor issues on the west coast, which had redirected more cargo to the east coast began to trend back to norms following the passing of a labor agreement. Before the west coast labor strife, the market share was 4-to-3 in favor of the west. During the labor impasse, it evened out, but now is moving back to more historical norms.
Asia and Europe’s economic woes also impacted our port activity, pushing cargo down 5.5% (seasonally adjusted). However, Savannah’s port activity is still up 7.4% for the year, after topping out at 26% in April of 2015. Despite, the ups and downs, Savannah’s ports remain on a “on a longer term sustainable trajectory,” which is good news for the area economy.
Savannah Area Jobs Increase by 1,500
Savannah”s metro area (including Chatham, Bryan and Effingham) added 1,500 jobs and averaged 171,500 for Q3. During the last 12 months, employment has increased 3%, which is lower than the 4% growth rate at the close of 2014. However, the jobs picture is outpacing the long-term average of 1.6% since 1990.
Business and professional service jobs gained the most, gaining 500 jobs. The sector has climbed 15% over the last year. It now stands, third behind Savannah’s leading job producers leisure/hospitality and education/health. Retail jobs rose by 400 workers, while local government gained 300 jobs. Tourism jobs stayed the same. Manufacturers gained 300 jobs, construction jobs continued to trend downward, dropping 100 jobs.
– Lisa Yannett
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