The Savannah metro economy experienced subdued growth in the third quarter of 2023 following a modest dip in activity in the second quarter, as reflected in 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., Georgia Southern’s Fuller E. Callaway Professor of Economics. “The tourism industry contributed modestly, but retail sales activity gave up ground during the quarter. The prospects for stronger growth into mid-2024 will depend on hiring goals among the area’s major manufacturers. Hyundai Motor Group Metaplant America and its associated suppliers will drive a significant portion of growth in the manufacturing sector. Further, high-wage manufacturing employment growth will also be driven by Gulfstream as it adds 1,600 workers.”
Employment Trends
Metro Savannah employers added 1,800 workers during the quarter, raising total employment to a record high of 204,300. Most of the growth was in the service sector, but manufacturing continues a consistent upward trend reaching back to early 2021.
In the service sector, about 1,600 jobs were added with most new workers concentrated in the hospitality sector (+500 jobs) and education/health (+500 jobs). Notably, business and professional services added 300 workers, and following the 300 added in the second quarter, reversed a four-quarter trend of job losses. This sector serves as a bellwether and recent gains are attributed to modestly increased business-to-business activity in the region.
In contrast, retail trade released 300 workers, generally consistent with a 1.2% decline in retail sales. Combined, education and health remain the region’s top job-providing sector with 29,400 workers followed closely by tourism with 29,300 workers.
In the regional logistics sector, activity is normalizing following two exceptionally strong years heavily influenced by the pandemic. Consumer purchasing patterns shifted toward goods away from services during the pandemic and this was reflected in substantially increased container traffic through the port. In the post-pandemic period as consumer purchasing patterns began normalizing, so did activity at the port. In 2023, container traffic at the port fundamentally returned to the nation’s pre-pandemic best growth trend.
The sector added 100 jobs during the quarter and stands at 18,300 workers, which is 12% higher than the pre-pandemic peak. Georgia Ports Authority has $4.5 billion in port infrastructure investments planned during the next 10 years as the logistics footprint is expected to double, creating additional jobs and associated business opportunities.
The goods-producing side of the economy grew modestly during the quarter. Manufacturing employment increased 200 workers rising to 19,900 for the quarterly average and hit 20,000 workers in September. Manufacturing has added an average of 200 workers per quarter for the past three years, and is on a steady path of growth expected to increase through 2024 and into 2025 as hiring will increase to meet announced job creation and investment at Gulfstream, Hyundai and their associated suppliers. Construction employment held steady at 9,500 jobs.
Private sector wages, after adjusting for inflation, declined to $24.61 per hour during the quarter, a 2.5% decline from $25.25 during the previous quarter. The length of the private sector workweek shortened by 1.3% (about 24 minutes) to 31.9 hours.
In the labor market, the monthly number of initial claims for unemployment insurance (UI) increased 9.8% to 796 from 724 in the previous quarter. This is 12% higher than the average of 705 per month during the previous 12 months. The regional unemployment rate held steady at 3%, its average rate through all of 2023 to date.
Housing Market
The issuance of construction permits for single-family homes increased 11.2% from the previous quarter. The upside swing to 645 permits is modestly above an anchor around 575 permits issued per quarter since early 2019. The average value for each single-family unit increased 2.2% to $263,200 from $257,500 in the previous quarter.
In closing, the regional forecasting index continues to send the signal that economic expectations should be tempered through mid-2024. However, the resiliency of the regional economy in reabsorbing laid-off workers, maintaining employment growth and holding a low unemployment rate is remarkable in the face of tight monetary policy and elevated interest rates. Further, the ramping up of employment for the Hyundai Motor Group Metaplant America, its suppliers, and Gulfstream will offset the negative signal from the forecasting index and propel the regional economy forward into 2024. In addition, the bellwether business and professional services sector is recently showing strength.
The intermediate and longer-term prospects for the Savannah metro economy remain excellent as the manufacturing and logistics industries notably expand through 2024 and over the next two to three years.
A Note from the Analyst
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About the Indicators
The Economic Monitor provides a continuously updated 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.
