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Economic Monitor: Q1 2017 brings strong rebound from Matthew’s effects

  • Savannahs ports have been on a record-setting tear for the first part of 2017, with each month setting records for volume handled. (GPA Photo/Stephen B. Morton)
  • After posting its best ever passenger numbers in 2016, the Savannah/Hilton Head International Airport is on track to topple that statistic this year, with nearly 1 million passengers through May. (Photo courtesy Savannah Airport Commission)
  • Steve Bisson/Savannah Morning News Visitors enjoy the fountain in Forsyth Park. Officials expect 2017 to be the strongest tourism year in Savannah’s history. (Steve Bisson/Savannah Morning News)
  • With the red line representing an historic average , new claims for unemployment insurance are at a 20-year low. (Source: Ga. Dept. of Labor)

The Savannah metro economy returned to healthy growth in the first quarter of 2017, exhibiting substantial strength as the effects of Hurricane Matthew began to quickly dissipate.

According to Armstrong State University economist Michael Toma, author of the quarterly Coastal Empire Economic Monitor, gains in total employment, port activity, retail sales, passenger boardings at the airport and consumer confidence were particularly strong, putting the three-county Coastal Empire on a growth trajectory that should be sustainable at least through the rest of the year.

Especially significant for Chatham, Effingham and Bryan counties was the labor market, where new claims for unemployment insurance have dropped to a 20-year low.

“I think that statistic is by far the most interesting of the quarter,” said Toma, director of the Center for Regional Analysis at Armstrong.

“We are very close to full employment, which means we should begin to see wage rates rising in response to the tighter markets.”

Ports, tourism strong

Savannah’s ports have been on a record-setting tear for the six months through April, with each month setting records for volume handled in the month, according to the Monitor.

Container volumes were up 4.6 percent over the previous quarter and up 10 percent from the first quarter last year.

In the tourism industry, seasonally adjusted hotel room revenue for the first quarter dipped slightly from the last quarter of 2016, but Toma described that as an anomaly.

“What we were seeing in the fourth quarter were above-average hotel room rentals along the Interstate 95 corridor as a result of Hurricane Matthew,” he said, adding he expects tourism activity to return to healthy growth in the second quarter.

“A good indication is that first quarter hotel/motel revenue was nearly eight percent ahead of the same quarter last year,” he said.

Visit Savannah president Joe Marinelli concurred.

“Savannah truly did see a very favorable and quick bounce-back following Hurricane Matthew last fall,” he said, adding that better-than-average weather in the first quarter also helped drive stronger visitor numbers to start the year.

“Comparing the first quarter 2017 to that of 2016, hotel occupancies were up three percent, the number of rooms sold was up six percent and overall room revenues were favorable by nine percent,” Marinelli said.

“This is also reflected in the hotel/motel and sales tax collections for both the city and county.

“Starting the year so strong practically ensures us that, from a revenue standpoint, 2017 will be the strongest tourism year in Savannah’s history.”

Airport flying high

After posting its best ever passenger numbers in 2016, the Savannah/Hilton Head International Airport is on track to topple that statistic this year, with nearly 1 million passengers through May.

The Monitor reports boardings up 15 percent in the first quarter and overall airport numbers indicate no slowdown in the second quarter.

April numbers set a record for that month, while May’s nearly 237,000 passengers set an all-time record as the busiest month in the airport’s history.

Airport executive director Greg Kelly credited additional flight options from seven airlines for the passenger growth.

Those airlines — Air Canada, Allegiant, American, Delta, JetBlue, Sun Country and United — offer 23 destinations with 49 daily nonstop departures to a variety of major cities including Atlanta, Boston, Charlotte, Chicago, Dallas, Detroit, Houston, New York, Philadelphia, Toronto and Washington, D.C.

Additional weekly nonstop flights and destinations are offered on a seasonal basis. Of those, Allegiant Airlines notched the highest year-over-year gains, with a 170 percent jump in departing passengers and 167 percent growth in arriving passengers.

Housing jumps again

In the housing market, the number of building permits issued for single-family homes rose for the second consecutive quarter, up 12 percent from the fourth quarter and six percent higher than the first quarter a year ago.

New residential homes permitted for construction rose from 444 in 2016’s fourth quarter to 496 in the first quarter of 2017.

Sales of existing homes across the three-county area are also on the rise, with 2017 proving to be the best year so far since 2012, according to the Savannah Multi List Corp.

May sales of 775 homes set a new high, both in number and dollar value — $188.5 million.

“We certainly had a wonderful spring,” said Linda King, president of the Savannah Area Realtors, adding the numbers signify a sense of normalcy returning to the market after Hurricane Matthew, as well as a better job market and healthier economy.

Good start to 2017

For Toma, healthy is the operative word.

“Basically, the numbers are all doing what they are supposed to be doing in an economy that’s characterized by healthy growth,” he said.

“There aren’t inexplicable data anomalies, there aren’t any weak spots. We’re not overheating or exhibiting anything that’s unsustainable.

“With the exception of the fourth quarter, when we got kicked in the head a little by Matthew, it’s the same song, next verse, with a healthy economy moving in all the right directions,” he said. “That’s not a bad place to be at all.”

Toma said he expects to have a special edition of the Monitor — one solely devoted to the economic impact of Hurricane Matthew on the Coastal Empire — by mid-July.

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Savannah Morning News business writer Katie Nussbaum contributed this report.

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