August 27, 2015
Economics Group
Special Commentary
Mark Vitner, Senior Economist
[email protected] ● (704) 410-3277
South Carolina Economic Outlook: Summer 2015
South Carolinians Still See a World of Opportunity
South Carolina’s economy continues to work its way through a transition from one built around traditional
manufacturing, under constant pressure from foreign competitors, to an economy built around advanced
manufacturing that is thoroughly engaged in the global economy. This transition has not come easily and has
taken considerable time, beginning with efforts to entice Michelin to invest in world class tire manufacturing
facilities back in the mid-1970s and continuing with other marquee developments such as BMW’s
manufacturing plant in Greer, Boeing’s aircraft assembly plant in North Charleston and a whole host of other
facilities ranging from Continental Tire in Sumter, Honda near Florence, Giti Tire in Chester County and
Volvo and Daimler back in Charleston.
The influx of new capital projects into the Palmetto State has further brandished the state’s credibility as a
place where world class manufacturers can operate efficiently, located right in the heart of one of the fastestgrowing regions in the world. The Southern United States, stretching from Texas to Maryland, reported a
GDP of $6.1 trillion in 2014, which would rank as the world’s third-largest economy, behind only the rest of
the U.S. and China. Between 2010 and 2014, the South’s economy grew at a 4.2 percent annual rate, which
outpaces the U.S. and a vast majority of other OECD countries during this period.
Not only is South Carolina located in the heart of one of the world’s fastest-growing markets, but it is also
one of the lowest cost states to operate from and has infrastructure that is less taxed than many of its
neighboring states. Yet, South Carolina still offers excellent access to global markets via the Port of
Charleston and Charlotte/Douglas International Airport. Much of the investment that has made its way to
South Carolina in recent years has come from overseas. The latest data from the International Trade
Administration show that overseas firms employ 115,900 South Carolinians, accounting for 7.6 percent of
private-sector employment, which is second-highest share in the nation. The top four origins of foreign
investment in South Carolina are Germany, France, Japan, and the United Kingdom.
Figure 1
Figure 2
Southern U.S. Nonfarm Employment
South Carolina Gross State Product & U.S. GDP
5%
Year-over-Year Percent Change
Year-over-Year Percent Change
5%
Florida
4%
4%
South Carolina
3%
3%
North Carolina
2%
2%
1%
1%
Texas
0%
-1%
Mississippi
-2%
-2%
Alabama
-3%
-3%
Virginia
U.S. GDP: 2014 @ 2.2%
South Carolina GDP: 2014 @ 2.2%
-4%
-5%
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
2.5%
2.5%
Georgia
0%
-5%
2.9%
Arkansas
-1%
-4%
3.6%
3.0%
2.4%
Tennessee
2.2%
1.7%
1.6%
1.4%
0.8%
Oklahoma
Louisiana
July 2015
0.7%
0%
1%
2%
3%
Source: U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities, LLC
This report is available on wellsfargo.com/economics and on Bloomberg WFRE.
4%
South Carolina
is located in the
heart of one of
the world’s
fastest growing
markets.
South Carolina Economic Outlook: Summer 2015
August 27, 2015
Job growth has
been stronger in
South Carolina
than it has been
nationwide.
WELLS FARGO SECURITIES, LLC
ECONOMICS GROUP
China is also becoming a major force in South Carolina. Chinese firms have made a number of major
investments in the state, including Haier Group, which built a plant in Camden in 1999 to make refrigerators
and related products. The plant has subsequently expanded and is expected to add
410 new jobs in the next five years. Keer Group, which is a Chinese textile manufacturer, opened a textile
plant in Lancaster County in December 2013, where it is producing cotton yarn from cotton grown right
along the cotton highway stretching from that area back down toward Myrtle Beach. The company has
invested more than $200 million in the state-of-the-art facility, which employs over 500 workers in the
state. Other Chinese investments include Bluestar Silicones, which opened a manufacturing plant and R&D
center in York in 2012 and JN Fibers, which opened a textile plant in Chester County. In addition, Giti Tire,
which is based in Singapore and has strong ties to China and Volvo, recently announced that it would build a
new $500 million assembly plant in Charleston. Exports to China from South Carolina have surged nearly
400 percent over the past five years, making China the number one export destination for the state.
The influx of foreign investment and domestic investment from leading companies, such as Boeing, is one of
the reasons why so many South Carolinians continue to feel optimistic about the state’s economic future
even though the state has faced a challenging road back from the Great Recession. South Carolina’s
unemployment rate rose nearly 2 percentage points higher than the nation’s during the recession and has
taken longer to come back down. The unemployment rate is currently 6.4 percent, 1.1 percentage points
above the U.S. rate.
Despite the higher unemployment rate, South Carolinians generally feel more positive about the economy in
comparison to Americans as a whole. Job growth has actually been stronger in South Carolina than it has
been nationwide, with nonfarm employment rising 2.6 percent over the year. The state’s real GDP growth
essentially matched the nation this past year, rising 2.2 percent. We expect South Carolina’s economy to
outpace the nation in coming years. The state has a number of powerful economic drivers that are likely to
ramp up considerably, not the least of which is Boeing, which has a record backlog and has big expectations
for its manufacturing operations in the state.
Manufacturing is far from the only thing that has gotten back on track in South Carolina. The state’s housing
market took a beating during the recession, particularly along the coast, which was and is now once again a
major destination for retirees and seasonal residents from the Northeast, Midwest and Canada. Myrtle
Beach continues to be one of the fastest growing metropolitan area in the country, with population growth
averaging a 2.1 percent pace since 2010. Retirees also continue to flock to other parts of the state including
Hilton Head/Bluffton, Charleston, the Upstate, Aiken, and the South Carolina suburbs of Charlotte. The
influx of retirees has helped propel overall population growth, which rose 1.3 percent in 2014, nearly twice as
fast as the nation. Of course there are not just retirees in these figures. South Carolina is also attracting
scores of new residents from other parts of the country that are drawn to the state by the relative abundance
of employment opportunities and excellent quality of life.
Figure 4
Figure 3
South Carolina vs. U.S. Unemployment Rate
South Carolina Manufacturing Exports
Seasonally Adjusted
$35
Manufacturing Exports: 2014 @ $28.8B
$30
$30
$25
$25
$20
$20
$15
$15
$10
$10
$5
$5
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
12%
12%
Thousands
$35
Billions of Dollars
Unemployment Rate: Jul @ 6.4%
United States: Jul @ 5.3%
10%
10%
8%
8%
6%
6%
4%
4%
2%
2%
90
92
94
96
98
00
02
04
06
08
10
12
14
Source: U.S. Department of Labor, U.S. Department of Commerce and Wells Fargo Securities, LLC
2
South Carolina Economic Outlook: Summer 2015
August 27, 2015
WELLS FARGO SECURITIES, LLC
ECONOMICS GROUP
South Carolina Employment Growth By Industry
Year-over-Year Percent Change, 3-MMA
South Carolina Employment Conditions
South Carolina Nonfarm Employment
3-Month Moving Averages
6%
Total Nonfarm
Trade, Trans. & Utilities
More
Government
6%
Prof. & Bus. Svcs.
4%
4%
Leisure and Hospitality
2%
2%
Manufacturing
0%
0%
-2%
-2%
Construction
-4%
-4%
Other Services
-6%
-6%
Number of
Employees
Educ. & Health Services
Less
Financial Activities
July 2015
Information
QCEW: Yr/Yr Pct. Change: Dec @ 2.8%
Nonfarm: Yr/Yr Pct. Change: Jul @ 2.6%
Household: Yr/Yr Pct. Change: Jul @ 2.6%
-8%
-10%
90
92
94
96
98
00
02
04
06
-2% -1%
0%
1%
2%
3%
4%
5%
6%
7%
-8%
-10%
08
10
12
Labor Force Participation Rate
14
3-Month Moving Averages, Seasonally Adjusted
70%
70%
3,000
67%
67%
2,400
64%
64%
8%
1,800
61%
61%
6%
1,200
58%
South Carolina Unemployment & Labor Force
Percent, Thousands of Workers, Seasonally Adjusted
12%
Unemployed: Jul @ 143.4 (Right Axis)
Employed: Jul @ 2,110.7 (Right Axis)
10%
Unemployment Rate: Jul @ 6.4% (Left Axis)
58%
South Carolina: Jul @ 59.3%
4%
600
United States: Jul @ 62.7%
55%
55%
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
2%
0
90
92
94
96
98
00
02
04
06
08
10
12
14
South Carolina Nonfarm Employment
Year-over-Year Percent Change
8%
South Carolina Nonfarm Employment
Year-over-Year Percent Change
8%
8%
4%
4%
0%
0%
-4%
-4%
-8%
-8%
8%
4%
4%
0%
0%
-4%
-4%
-12%
-12%
Manufacturing Employment: Jul @ 0.1%
Non-Manufacturing: Jul @ 3.2%
-8%
-8%
-16%
-16%
91
93
95
97
99
01
03
05
07
09
11
13
15
Office Employment: Jul @ 3.5%
Non-office Employment: Jul @ 2.7%
-12%
-12%
91
93
95
97
99
01
03
05
07
09
11
13
15
Source: U.S. Department of Labor and
Wells Fargo Securities, LLC
3
South Carolina Economic Outlook: Summer 2015
August 27, 2015
WELLS FARGO SECURITIES, LLC
ECONOMICS GROUP
South Carolina MSA Population Growth
South Carolina Economic Conditions
Population Growth 2010 - 2014, in Thousands
South Carolina MSA Unemployment Rates
July 2015, Seasonally Adjusted
Charleston
6.0%
Greenville
0.3
Florence
1.3
Spartanburg
7.7
Columbia
6.2%
Columbia
Sumter
30.8
Greenville
6.4%
36.7
Myrtle Beach
Spartanburg
39.0
7.1%
Charleston
Sumter
60.0
8.0%
0
Florence
10
20
30
40
50
60
70
8.1%
0%
2%
4%
6%
8%
South Carolina's Top 5 Export Industries
10%
2014, In Millions of Dollars
South Carolina's Top 5 Export Markets
Transportation Equipment
$12,037
2014, In Millions of Dollars
China
Machinery
$4,228
Germany
Chemicals
$3,874
Canada
$2,719
Plastics & Rubber
$3,622
Mexico
$3,905
$2,547
Electrical Equipment
$2,115
$1,407
$0
United Kingdom
$0
$1,000
$2,000
$3,000
$4,000
$5,000
South Carolina Housing Permits
60
60
Single-Family: Jul @ 26,424
Single-Family, 12-MMA: Jul @ 23,099
Multifamily, 12-MMA: Jul @ 6,688
50
Single-Family Average (1998-2003): 26,279
40
40
30
30
20
20
Thousands
Thousands of Permits, Annual Rate
Thousands
$6,000
$9,000
$12,000
Year-over-Year Percent Change
20%
16%
16%
12%
12%
8%
8%
4%
4%
0%
0%
-4%
-4%
-8%
-8%
-12%
-12%
United States: Jun @ 6.5%
South Carolina: Jun @ 8.0%
-16%
-16%
-20%
10
10
0
0
90
4
92
$15,000
Core Logic HPI: SC vs. U.S.
20%
50
$3,000
$1,863
94
96
98
00
02
04
06
08
10
12
14
-20%
90
92
94
96
98
00
02
04
06
08
10
12
14
Source: U.S. Dept. of Labor, U.S. Dept. of Commerce,
International Trade Administration, CoreLogic and
Wells Fargo Securities, LLC
South Carolina Economic Outlook: Summer 2015
August 27, 2015
WELLS FARGO SECURITIES, LLC
ECONOMICS GROUP
Charleston MSA Employment Growth By Industry
South Carolina MSAs
Year-over-Year Percent Change, 3-MMA
Total Nonfarm
Charleston MSA Nonfarm Employment
July 2015
Government
3-Month Moving Averages
8%
8%
6%
6%
4%
4%
2%
2%
Trade, Trans. & Utilities
Prof. & Bus. Svcs.
More
Leisure and Hospitality
Educ. & Health Services
Number of
Employees
Manufacturing
0%
0%
-2%
-2%
-4%
-4%
-6%
-6%
QCEW: Yr/Yr Pct. Change: Dec @ 4.2%
Nonfarm: Yr/Yr Pct. Change: Jul @ 2.6%
Household: Yr/Yr Pct. Change: Jun @ 2.6%
-8%
Financial Activities
Information
-2%
-10%
93
95
97
99
01
03
05
07
09
11
13
15
2%
4%
6%
8%
10%
Columbia MSA Employment Growth By Industry
Year-over-Year Percent Change, 3-MMA
Total Nonfarm
Columbia MSA Nonfarm Employment
Government
3-Month Moving Averages
8%
8%
6%
6%
Prof. & Bus. Svcs.
4%
4%
Educ. & Health Services
2%
2%
Leisure and Hospitality
0%
0%
Financial Activities
-2%
-2%
-4%
-4%
-6%
-6%
Trade, Trans. & Utilities
More
Number of
Employees
Less
Manufacturing
Other Services
July 2015
Information
-4%
QCEW: Yr/Yr Pct. Change: Dec @ 3.8%
Nonfarm: Yr/Yr Pct. Change: Jul @ 1.8%
Household: Yr/Yr Pct. Change: Jun @ 1.8%
-8%
0%
-8%
-10%
91
Less
Other Services
-2%
0%
2%
4%
6%
8%
10%
12%
-8%
-10%
-10%
91
93
95
97
99
01
03
05
07
09
11
13
15
Employment Growth
Year-over-Year Percent Change of 3-MMA, QCEW Employment
2014
Greenville MSA Nonfarm Employment
Cherokee
1.7%
3-Month Moving Averages
10%
10%
8%
8%
6%
6%
4%
4%
2%
2%
0%
0%
-2%
-2%
-4%
-4%
-6%
Spartanburg
3.4%
Greenville-Anderson
3.8%
York-Lancaster-Chester
4.9%
-6%
-8%
-8%
QCEW: Yr/Yr Pct. Change: Dec @ 3.8%
Nonfarm: Yr/Yr Pct. Change: Jul @ 2.9%
Household: Yr/Yr Pct. Change: Jun @ 2.6%
-10%
-12%
93
95
97
99
01
03
05
07
1%
2%
3%
4%
5%
6%
-10%
-12%
91
0%
09
11
13
15
Source: U.S. Department of Labor and
Wells Fargo Securities, LLC
5
Wells Fargo Securities, LLC Economics Group
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Global Head of Research,
Economics & Strategy
(704) 410-1801
(212) 214-5070
[email protected]
John E. Silvia, Ph.D.
Chief Economist
(704) 410-3275
[email protected]
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Senior Economist
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Currency Strategist
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Econometrician
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