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2015 forecast: SC’s steady economic growth to continue
By Peggy Binette, 803-777-7704
The Palmetto State can expect the consistent positive growth seen across most industries and regions in 2014 to continue into 2015, say University of South Carolina economists at the Darla Moore School of Business.
Doug Woodward and Joseph Von Nessen, economists in the Moore School’s Division of Research, released their annual forecast to media Wednesday (Dec. 10). They will present their full forecast to government and business leaders from around the state at the upcoming 34th Annual Economic Outlook Conference on Tuesday (Dec. 16).
That stable growth and employment gains will mean more personal income for South Carolinians. Job creation – the single best indicator of overall economic performance – is expected to grow at 1.9 percent in 2015, mirroring the 2 percent job growth rate seen in 2014, according to Woodward and Von Nessen.
“If you liked 2014, then you’ll like 2015,” Von Nessen says. “South Carolina’s economy hit its stride this year, and we expect that trend to continue.”
The manufacturing industry continues to be a major economic driver in South Carolina, though job creation is now shifting more toward the leisure and hospitality sector and the employment services sector, he says.
“Consumers are in better financial shape this year. Households are carrying less debt and their net worth has increased,” Von Nessen says. “This means that consumers have more disposable income, which is increasing demand for tourism-related industries, especially in South Carolina’s coastal regions.”
Energy prices, including the price of gasoline, also have declined dramatically in 2014, which is effectively a tax cut for consumers and a generator of further economic activity, he says.
Their analysis also shows major gains in the employment services sector, an industry comprising employment placement agencies, temporary help services, contract labor and staffing firms. Von Nessen says the gains in the sector points to a possible structural change in business hiring practices.
“We normally see an increase in the employment services sector during the early part of an economic recovery because uncertainty is high,” Von Nessen says. “However, the fact that job growth is relying more and more heavily on this sector over time implies that businesses are viewing the use of employment staffing firms and contract labor as a realistic, long-term hiring model to obtain their workforce.”
More people have joined the labor force in South Carolina, causing a slight increase in the unemployment rate in recent months. The rate, however, has dropped to 6.7 percent from 7 percent a year ago.
“This increase in the labor force is positive because it shows that South Carolinians are more optimistic and are seeing more opportunities for work,” Von Nessen says.
The Moore School forecast calls for the unemployment rate to decline to 6.3 percent over the next 12 months.
Despite the positive outlook for continued steady growth in 2015, the economists warn that moderate forecasts for global economic growth as well as the recent slowdown of the European economy potentially could impede South Carolina’s growth in 2015.
“As a percentage of total economic activity, South Carolina exports more goods and services to Europe than most other states,” Von Nessen says. “This means that we are more vulnerable to a European recession than other parts of the country.”
Real income growth in South Carolina – though positive – is expected to remain relatively mild, with a growth rate of 1.8 percent predicted for 2015. Real income across most regions of South Carolina has been consistently growing at a rate below the national average, he says.
In addition to the 2015 economic forecast, this year’s Economic Outlook Conference will include a presentation by Woodward titled “The Economic Impact of BMW: 20 years of Economic Development in South Carolina.”
The conference also will feature a keynote address from Sue Helper, chief economist of the U.S. Department of Commerce, on the current and future state of U.S. manufacturing and the implications for South Carolina. David Crowe, chief economist of the National Association of Home Builders, will address the lackluster growth in U.S. housing markets and the role housing will play in the future. Robert Key, senior vice president at CCM Investment Advisors, will examine the likelihood of a significant change in monetary policy in 2015 and how that would affect interest rates and financial markets more generally.
2014 at a glance: South Carolina communities
- In 2014, employment growth was positive in every major region of the state (October 2014 employment compared against October 2013). The largest gains occurred in Myrtle Beach (+4.0 percent), with other gains coming from Augusta (+3.5 percent), Greenville (+2.5 percent), Florence (+2.4 percent), Charleston (+2.1percent), Spartanburg (+1.9 percent), Sumter (+1.8 percent), Anderson (+1.7 percent), Rock Hill (+1.5 percent) and Columbia (+1.1 percent).
- South Carolina had gains in retail trade across most regions, though gains were smaller this year (+0.9 percent in October 2014 over October 2013 vs. +2.6 percent in October 2013 over October 2012). The primary gains in retail trade this year occurred in Myrtle Beach (+3.2 percent), Charleston (+2.7 percent), Spartanburg (+2.0 percent) and Rock Hill (+1.9 percent). More moderate gains happened in Anderson (+1.1 percent), Sumter (+0.5 percent) and Columbia (+0.5 percent). Year over year losses took place in Greenville (-2.1 percent) and Augusta (-0.8 percent).
- Residential building permit activity was up across most of the state over the last year. Comparing total residential building permits issued in October 2014 with those issued in October 2013, major gains were seen in Greenville (+57.7 percent), Myrtle Beach (+43.8 percent) and Charleston (+43.4 percent). Moderate gains were experience in Spartanburg (+8.7 percent), and a small decline occurred in Columbia (-3.5 percent). Housing activity closely follows employment growth, and Columbia has consistently had the lowest employment growth of all metropolitan regions throughout the current economic expansion, including 2014. As a result, Columbia is consistently experiencing very low permit growth relative to other regions in South Carolina.
- Unemployment rates in October 2014 declined across all metropolitan areas compared to October 2013. The largest decline (in percentage points) occurred in Myrtle Beach (-0.9), followed by Spartanburg (-0.8), Rock Hill (-0.8), Florence (-0.8), Sumter (-0.7), Augusta (-0.5), Anderson (-0.5), Greenville (-0.3), Columbia (-0.3) and Charleston (-0.3).
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