Highlights

Summary

Indicator Data

Commentary

Highlights return to top

• The South Carolina Leading Index dropped 1.1 percentage points.

• Residential Construction reached the lowest value of the last ten years.

• The state’s unemployment rate increased to 5.9 percent.

The Index of Leading Indicators for South Carolina is composed of the Average Manufacturing Workweek (hours), Initial Claims for Unemployment Insurance, and Real Weekly Earnings

The Index of Coincident Indicators for South Carolina is composed of Total Nonagricultural Employment, Real Retail Sales, and Total Unemployment Rate

Summary return to top

Overall, the picture for the South Carolina economy has not changed much in recent months. There are no signs of improvement in the housing sector, and retail sales remain depressed. The economy is still adding jobs, however, there are some signs that the labor market is also coming under pressure.

In November, the South Carolina Leading Index decreased by more than 1 percentage point. We have to go all the way back to December 2005 to find a value that is lower than the 142 observed for the current month. This is the fourth consecutive monthly drop in the leading index and a clear indication that the economy is heading into a period of even slower growth. A look at the individual components of the index reveals the housing market as the main drag in the index. In fact, after posting some small gains the previous month, housing starts in November dropped to a new low of 1,548 (unadjusted figure)—the lowest monthly value of the last ten years. This means that housing starts this month were at a level that was below the recessionary values of 2000-2001. For South Carolina, the cumulative values for November 2007 are 24 percent below last year. The only consolation is that things could be worse—as figures for other southeastern states such as Florida (-47 percent), Georgia (-27 percent), Maryland (-32 percent), and West Virginia (-28 percent) reveal. It is not clear whether the housing market has reached the bottom. The latest report from the S.C. Realtors Association shows that the average days on the market of homes sold in November increased 10 percent, suggesting that the housing market has not yet started its recovery.

The economic indicators for the manufacturing sector showed mixed readings in November. The average manufacturing workweek increased by 0.4 percent to a new level of 43.7 hours. A more detailed look at the data shows that the durable goods sector was responsible for this increase. On the other hand, real weekly earnings in manufacturing posted a slight decrease of 0.1 percent for the month. Initial claims for unemployment did not show any unusual activity. Actually, the latest number for the month of November shows a decline of 3.6 percent compared with the previous month. Finally, the U.S. Leading Index of economic activity, a variable that contributes to the S.C. Leading Index, dropped by 1.2 percentage points. This deterioration of the U.S. Leading Index, from 137.9 to 136.3, suggests that the U.S. is likely to slow down considerably in the coming months. In sum, the large drop for the leading index is the result of negative contributions from residential construction, the U.S. Leading Index, and weekly earnings.

The South Carolina Coincident Index increased by 0.6 percent in November. The only positive contribution to the coincident index came from Total Employment. In November, the Palmetto economy added 5,300 jobs, an increase of 0.3 percent with respect to last month. We should note that the other employment series for South Carolina that is collected by the Bureau of Labor Statistics (BLS), the Total Employment from the Local Area Unemployment Statistics (LAUS) program, shows a different picture for the employment situation. According to this series, the South Carolina economy has not added any jobs since March 2007. This discrepancy is likely to be resolved later on in 2008 when the BLS revises the series, but it serves as a caution that the situation in the labor market may not be as good as it looks. Real retail sales dropped 1.4 percent compared to the previous month. However, compared with last year, retail sales increased 1 percent. This is welcome news because real retail sales had four consecutive months of declines between June and September of 2007. This is the first time this year that retail sales have had two consecutive months of growth. Finally, the unemployment rate inched up 0.1 percentage point from 5.8 to 5.9 percent.

The South Carolina economy is going through a period of slow growth. There are increased signs that the pressure exerted from the depressed housing and financial markets is extending to the rest of the economy. In particular, the labor market is showing a lot less vitality than it did some months ago.

Notes
[1] Calculated from data provided by the S.C. Employment Security Commission.
[2] Calculated from data provided by the F.W. Dodge Corporation.
[3] Calculated from data provided by The Conference Board.
[4] Calculated from data provided by the S.C. Department of Revenue.
[R] Revised.
[n.a.] Data not available.
Monthly percentage change based on seasonally adjusted data.
Annual percentage change based on unadjusted data.
*1982-1984 dollars

Commentary return to top

The American Community Survey (ACS) is a project of the U.S. Census Bureau that collects annual information about detailed characteristics of the population and housing at the local level. Previously, this information was only available with the publication of the decennial census. The ACS data will provide, for the first time, a continual stream of updated information for states and local areas. Thus, it becomes possible to monitor social and economic trends in local communities in years between decennial censuses. For now, we will just look at changes in population across the state using the latest ACS results.

In terms of population, South Carolina was one of the states that grew above the U.S. average. The 2000 Census identified a total population of 4,013,644; six years later, the 2006 ACS estimate is 4,321,249—a growth of 7.7 percent, well above the U.S. average of 6.4 percent. But, as shown in Figure 1, population growth was quite uneven across the state. The map shows population growth for the 27 PUMA (Public Use Microdata Areas) regions in South Carolina.[1] As we can see, there are two main trends. One trend is for the population to increase around the large urban centers. The other visible trend is for the population to move to the coastal areas. Interestingly, the PUMA with the highest growth rate is the County of York. There, in just six years, population increased at a rate of 22.8 percent. In this case, the proximity to Charlotte, N.C., and the existence of Interstate 77 played a determinant role. Other counties that also experienced a large influx of population are those along the coastal areas, namely Horry, Colleton, Jasper, and Beaufort. Counties in the larger metropolitan areas such as Lexington, Richland, Dorchester, and Spartanburg, also had above-average growth. The ACS provides us with detailed information about the characteristics of the local population. In future commentaries we will look at the changing structure of these populations.