Savannah Economic Monitor 2020, Q4

March 16, 2021 - Georgia Southern University’s latest Economic Monitor reports that the Savannah metro area economy continued to bounce back during the closing quarter of 2020. 

“Total regional employment rebounded strongly, along with continued strength in port activity and logistics, but the tourism industry continues to struggle,” stated Michael Toma, Ph.D., Fuller E. Callaway Professor of Economics. “High-contact service sector firms remain hobbled by the pandemic while manufacturing steadied. Growth was robust in the business and professional services sector and likely reflects migration of workers from the tourism sector.”    

Employment growth will slow in the first quarter as compared to the gains reported for the fourth quarter, noted Toma. More substantial recovery will be delayed until the regional hospitality industry, and the service sector in general, return to early 2020 levels. There is little change in the forecast for those sectors until the population begins to approach herd immunity from COVID-19.             

Regional Economy Recovering

The business index for the Savannah metro economy soared 6.6% during the fourth quarter. The index increased to 176 from 165.1. Across-the-board growth in all eight underlying indicators spurred the rebound. Port activity, boardings at the airport, electricity sales, consumer confidence and retail trade all registered double-digit quarterly growth, from 14% to 20%. Hotel room rentals rebounded 8.4% while overall employment growth was 3.4%.   

Employment Trends

Employment in Savannah’s three-county metro area averaged 182,700 for the quarter, a gain of 6,000 workers. From the low recorded in April of 159,600, employment recovered to 185,000 in December. The December job figure is 99% of its pre-pandemic level. Business and professional services employment surged nearly 10%, adding 2,100 workers. Employment in this sector is 5,000 workers above its pre-pandemic level and likely reflects migration from the tourism sector that remains 4,000 workers below its pre-pandemic level. Retail trade added 1,200 workers (+5.9%).   

The goods-producing sector added 500 workers. Manufacturing recovered 200 workers and rose to 17,600, while construction added 400 laborers, rising to a post-Great Recession peak of 8,600 workers. The regional logistics sector added 900 jobs (+5.7%) for a total of 16,100 workers. Logistics employment continued to grow during the year and is 10% higher than before the pandemic struck the economy.

The tourism economy is beginning to improve, but activity remains well below pre-pandemic levels. The quarterly gain in employment was 1,100 workers. As of December, the sector bounced back to 22,300 workers after falling to 13,600 in April, reflecting a recovery of 8,700 jobs. Yet, employment remains at 81% of its pre-pandemic peak. Hotel room rentals increased 8.4% from the previous quarter but remain down 34% from fourth-quarter levels of a year ago. Airplane boardings remain down 58% from year ago but did grow 16% from the third to fourth quarters. Automobile rentals also remain down about 50% from previous-year levels.

Hourly wages in the private sector decreased 2.8% to $22.56 from $23.22 in the previous quarter but remain on a modest upward trend. The private sector workweek lengthened 3.8% to 33 hours and now is back on trend after the pandemic sliced about two hours off the workweek.    

The average number of monthly initial claims for unemployment insurance decreased 55% to 5,070 from 11,218 in the third quarter. The seasonally adjusted unemployment rate fell to 5.4% from 6.9% in the previous quarter. The comparable unemployment rate from the previous year was 2.8%. 

Housing Market

Strength in the regional housing market continues. While the pace of construction moderated mildly during the fourth quarter, the overall health of the housing market is strong.   

The seasonally adjusted number of single-family homes permitted for construction declined 5.3%, dropping to 656 units from 692 in the previous quarter. However, the fourth quarter number was 13% above the average number of homes permitted during the previous four quarters. Average valuation per single-family unit increased 1.4% to $264,600 from $260,900.  

Regional Recovery Will Continue 

The Savannah area business forecasting index rebounded 7.6% during the fourth quarter of 2020. Further strong recovery of the index is expected in the first quarter of 2021 because of the data smoothing process applied to the underlying leading indicators. 

A substantial decline in the flow of newly unemployed into the ranks of the unemployed, combined with the 6,000-person gain in the workforce signifies that the labor market’s health is rapidly recovering from the pandemic. 

Strength in the housing market, logistics industry and land development will support the regional economy, but constrained growth in tourism and high-contact services will limit upside potential in the next six months. 

More robust recovery is anticipated in the second half of 2021, as the general population makes substantial progress toward herd immunity from COVID-19. 

The Economic Monitor is available by email and at the Center’s website https://parker.georgiasouthern.edu/big/big-programs/cbaer/. If you would like to receive the Monitor by email, send a subscribe message to CBAER@georgiasouthern.edu.

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