SAVANNAH — Armstrong State University’s latest Coastal Empire Economic Monitor, which analyzes data and identifies trends affecting the regional economy, reports that the Savannah metro economy continued growing during the second quarter of 2016, but some turbulence lies ahead.
Increased gains in total employment — paired with boosts in consumer confidence, airport traffic and electricity sales — carried positive numbers in the summer, however, seasonally and inflation-adjusted port activity declined. Economic growth is expected to weaken through the second half of 2016 and in early 2017.
"If we look at the gains achieved in the first half of the year, we can, by comparison, expect growth to slow in the coming months," said Michael Toma, Fuller E. Callaway professor of economics and the director of Armstrong’s Center for Regional Analysis. "The effects of Hurricane Matthew will further test the resiliency of the economy during the fourth quarter."
In the housing market, building permit issuance for single-family homes fell sharply by 10 percent from the first quarter, marking a significant drop from the year prior. The seasonally adjusted number of new residential homes permitted for construction was 439, compared to 487 in the first quarter.
The average valuation of building permits for single-family homes remained exceptionally strong, holding at about $250,000 for the second consecutive quarter. This is well over 20 percent higher than valuation data going back a few years, but is likely to decline in upcoming quarters.
Additional highlights from the latest Economic Monitor include:
• The forecasting Coastal Empire leading economic index gained ground, increasing 1.4 percent, from 153.3 in the previous quarter to 155.5, but there is some weakness below the top line number, particularly in the labor market and in the residential housing market. Consumer expectations in the south Atlantic states declined modestly during the second quarter.
• Data suggests increases in total regional employment and airport traffic, blended with a rebound in consumer confidence, gave the index the bump it needed to offset flat hotel and retail sales, as well as weaker port activity.
• Figures for manufacturing employment show 18,100 workers, but this will likely be revised after an impending Georgia Department of Labor annual data benchmarking process. The number is expected to drop by as many as 1,000 jobs due to reporting delays and data collection procedural issues.
• In the labor market, seasonally adjusted initial claims for unemployment insurance (UI) jumped 6.7 percent to 812 per month from 762 claims. The number of UI claims is 10 percent higher than levels during the same time last year. The regional unemployment rate bumped up to 5.2 percent (seasonally adjusted) in the first quarter, but dropped to 4.8 percent for the second quarter.
The Coastal Empire Economic Monitor presents quarterly economic trends and short-term economic forecasts for Savannah’s Metropolitan Statistical Area, which is north of Liberty County, but effects the whole area. The quarterly report measures the heartbeat of the local economy, based on the analysis of economic data from the U.S. Census Bureau, the U.S. Department of Labor’s Bureau of Labor Statistics, the City of Savannah, Georgia Power and the three counties in the MSA—Chatham, Bryan and Effingham.
The report presents a short-term forecast of the region’s economic activity in the next six to nine months and is available for free by email. To subscribe, email CRA@armstrong.edu.
Armstrong’s Center for Regional Analysis, housed in the university’s economics department, meets the applied research needs of Savannah’s business and community organizations.
Areas of concentrated research include regional economic forecasting, economic impact analysis, economic development and business expansion, tourism development, survey-based research and specialty reports on topics of state, regional and local interest.