Contact:
Mark Vitner
(704) 383-5635
Media Contact:
Agnes Stevens
(919) 417-0858
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June 12, 1998
FIRST UNION ECONOMIC ANALYSIS: SOUTH CAROLINA'S SMALLER COMMUNITIES FEEL BENEFIT OF STATE'S CONTINUED PROSPERITY
CHARLESTON, S.C. - South Carolina's economy is flying high, and the trends look promising for continued strong growth in the metropolitan and rural areas of the Palmetto State.
That's what First Union economist Mark Vitner forecast today for the state's banking leaders at the 1998 annual convention of the South Carolina Bankers Association. The organization, chaired by First Union-South Carolina President Sid Tate, is holding its annual convention in Charleston June 12-13.
Vitner noted that South Carolina's Gross State Product soared at a 9 percent annual rate during the first quarter of 1998, as layoffs in textiles and apparel subsided and the construction and tourism sectors made substantial gains.
The addition of more than 23,000 jobs during the first quarter of 1998 pushed the unemployment rate to the lowest level in the state's history. Over the past year, the unemployment rate has fallen nearly two full percentage points to 2.9 percent at April 1998. Since April 1997, the state's economy has grown 6.1 percent, adding 71,300 jobs. During 1997, South Carolina landed more than $5.5 billion in new industrial investment.
"The big story is how development is having an impact now in the state's smaller metropolitan areas and rural communities," Vitner said. "BMW and the Upstate tend to get most of the headlines, but Aiken County led the state in announced capital investment last year: $891.6 million in new projects, which will certainly help counter the impact of previous layoffs at the Savannah River Plant."
In the past three years a total of $16.5 billion in new projects has been announced, and just over a quarter of this total is destined for, or already in place, in the state's non-metropolitan areas.
Job growth across South Carolina has resulted in a tight labor market, especially in the larger MSAs, because population growth in the state has averaged just 1 percent per year since 1990. Last year the state's population grew by a net 45,000 and is on target to maintain that pace in 1998. In addition to job seekers, South Carolina attracted retirees, especially along the coast. New retirement developments outside Hilton Head, Charleston and Myrtle Beach should attract close to 50,000 retirees over the next 10 years, Vitner forecast.
Construction activity has increased nearly 7 percent over the past year, as single-family home building has risen to record levels and commercial construction has increased. "Nearly all of South Carolina's real estate markets are in great shape, and we don't look for a return of the overbuilding which plagued that sector in the late 1980s," Vitner said.
Tourism posted another record year in 1997 and appears headed for even stronger gains in 1998. Over the past year, tourist-related industries grew 9.4 percent and the fastest-growing markets in the state are along the coast: employment in Charleston climbed 5.3 percent over the past year, and hiring is up 5 percent in Myrtle Beach and 4 percent in Hilton Head.
The Upstate led South Carolina in total job gains over the past 12 months. Employment in the region rose 3.1 percent for a gain of 14,400 net new jobs, and Vitner projected that activity in the region would remain brisk.
He cited BMW's recent announcement of a $600 million expansion of its assembly plant outside Spartanburg, which comes on top of nearly $1.4 billion in total new investment announced in the region last year. Over the past 18 months more than 7,500 new jobs have been announced in the Upstate.
Among the state's smaller metro areas, Florence is a standout. The unemployment rate in Florence County has plummeted nearly five percentage points over the past two years to just 3.5 percent, and the area has attracted $218 million in new investment last year, the sixth best performance in the state.
"Florence has been helped along by continued expansion at existing firms such as NanYa Plastics, as well as investment from newer companies. Honda, for example is building a $30-million all-terrain-vehicle plant there," Vitner said.
He said South Carolina's overall outlook is positive, as most of the $5.5 billion in capital investment announced this past year is only now beginning to be built out. Vitner forecasts that the full-year GSP will increase 5.3 percent, and he expects unemployment to remain in the 3 percent range as the state sees close to 70,000 jobs created in the private sector.
"South Carolina is one of the most attractive places to build a new factory in the United States. The state has excellent highway and rail access and one of the best ports in America. That's one reason so many international companies are locating there," Vitner said. "The good times should last quite a bit longer."
Vitner is a vice president of economic research in First Union Capital Markets Corporation, a subsidiary of Charlotte-based First Union Corporation, (NYSE:FTU) which had assets of approximately $220 billion at March 31, 1998.
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