The Savannah area is adding jobs by the gobs, all in the private sector.
Non-government employers hired an additional 2,600 workers in the second quarter, offsetting cuts by local and state governments, according to statistics from the Georgia Department of Labor. The second quarter ended June 30th.
The statistics included estimates for June, which will be revised next month. The typical margin of error ranges from 100 to 300 jobs, both plus and minus.
The biggest second quarter gainer was the leisure and hospitality industry, not surprising given Savannah’s seasonal attractiveness as a tourism destination. But other key economic sectors, including manufacturing and professional and business services, also saw upticks.
The returns are reason for “cautious optimism,” according to Georgia Southern University economic researcher Benjamin McKay.
“We’re really at a critical junction, a point where we are picking up momentum but where there are national and international factors that could start weighing on further
gains,” McKay said. “One of our largest trading partners is Europe, and if the economic situation over there worsens, all that wonderful activity at the port could slow down and that would have impacts elsewhere.
“Savannah is going to be OK, but the jobs picture is likely relatively flat for the rest of the year.”
The mid-year job returns remain below 2011’s numbers through the first six months but are well above mid-year 2010 and mid-year 2009. And there are hints 2012’s gains could be more sustainable than last year’s. Growth in 2011 was driven by retail, tourism and education and health services gains that gradually disappeared between June and September.
June 2011 saw a net loss of 100 non-government jobs; the private sector added an estimated 1,300 jobs this June.
“All of the things that have been happening over the last 10 months or so with manufacturing growth are starting to filter through the economy,” said Bill Hubbard, president of the Savannah Area Chamber of Commerce. “We’re now seeing business services benefit because of the multiplier effect.”
Tourism returns in focus
Savannah’s record tourism returns and the opening of new hotels, restaurants and businesses contributed to 1,100 new leisure and hospitality jobs in the quarter. A portion of the 300 additional retail positions can also be attributed to tourism.
Industry insiders will keep close watch on seasonal contraction in the third quarter. The sector cut 1,100 jobs in the third quarter of 2011 and 800 more in the fourth quarter. For calendar year 2011, the leisure and hospitality sector saw a net gain of 200 jobs.
But Savannah’s tourism season is lengthening if bed-tax revenue collections are any indication. Joe Marinelli with Visit Savannah, the local equivalent to a convention and visitors bureau, said he expects more stability in the sector’s labor market this year.
“Savannah no longer experiences the dramatic seasonal tourism peaks and valleys of years past, and employers are keeping staffing levels higher throughout the year,” Marinelli said. “And with more hotels, restaurants, retail stores and tours being added to our product offering, employers do what they need to do to keep better employees versus losing them to the competition.”
The local tourism sector is evolving quickly, Marinelli said, pressuring employers to invest more heavily in their labor force in terms of numbers, training and compensation. Savannah has become more of a “destination of choice” for seasoned travelers with greater expectations.
“If our service levels don’t match our customers’ expectations, they will go elsewhere,” Marinelli said. “Overall, Savannah scores well in this category, but we also must be mindful of the large step between average service and outstanding service.”
Struggling sector recovery ahead
A handful of sectors continue to struggle in terms of job growth, but not enough to cause wide spread alarm.
State and local governments cut 700 jobs in the second quarter but remain ahead of mid-2011 numbers. And the second quarter dips among those employers, as well as those within the education sector, are due in part to the school year ending in June.
The other two lagging sectors, construction and financial services, were particularly hard hit by the recession and are just now eyeing the start of a recovery. Nearly half of the 7,600 jobs lost locally since mid-2008 came in the construction industry. Banks cut an additional 1,200 positions.
However, commercial construction and homebuilder activity is picking up and banks and other financial services providers are stabilizing, promising future job growth in those sectors.
Growth in those sectors and the rest depend upon demand, Georgia Southern’s McKay said. The slow pace of the economic recovery has business leaders and owners focused on the short-term bottom line.
“It’s about what their needs are,” McKay said. “If you have folks working double shifts every day to fill orders, you will look to fill that void. But I don’t think we’ll see a ton of mass hiring the rest of this year.”
The Savannah Chamber’s Hubbard is anticipating a slowing of the growth in the second half of the year too, due in part to election year uncertainty and as small business owners grapple with the ramification of Obamacare.
The pending deployment of the 3rd Infantry Division to Afghanistan could also stem ancillary economic growth, Hubbard said.
“But at the same time, when those soldiers come back, we’ll see an uptick in spending,” Hubbard said. “We seem to be getting back into a more natural cycle now.”