February 16, 2016
Economics Group
Special Commentary
Mark Vitner, Senior Economist
[email protected] ● (704) 410-3277
South Carolina in the Spotlight: February 2016
Primary Focuses Attention on the Palmetto State’s Economy
As host of one of the earliest presidential primaries, South Carolina and its economy have received a great
deal of attention. The Palmetto State has generally enjoyed robust growth in recent years, with nonfarm
employment rising 3.3 percent in 2015 and the unemployment rate falling 1.1 percentage points to
5.5 percent (Figures 1 and 2). The economic good fortune is largely due to an astonishing run of economic
development that helped draw thousands of high-paying manufacturing jobs to the state. Much of this
industrial development 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 the second-highest share in the nation. Exports have also become more
important to the state.
South Carolina’s success at recruiting international investment and the state’s growing export business
comes at a time where trade deals have come under increased scrutiny. The growth of international
investment and exports has resulted from a concerted effort by political leaders and business leaders to
diversify the state’s economy away from its historic dependence upon textiles. The remake began in the
1970s when the state landed a major investment from Michelin. The French tire-maker opened its first South
Carolina tire plant in 1981 and now operates 10 plants in the state, as well as its North American
headquarters located in Greenville.
Michelin’s initial investment and the success that the firm has achieved have helped pave the way for other
firms to set up facilities in South Carolina. Tire manufacturing has become a major industry in the state, with
Bridgestone investing more than $1.2 billion to build two massive facilities near Aiken and Continental Tire
building a 1-million square foot plant near Sumter and moving its North American headquarters to Fort Mill,
located just outside Charlotte. Singapore-based Giti Tire, which also has its North American headquarters in
Fort Mill, began construction on a $560-million tire manufacturing plant in Chester County. In addition,
Trelleborg A.B. recently opened a 460,000-square-foot agricultural equipment tire manufacturing plant in
Spartanburg. South Carolina now ranks as the number one state for tire manufacturing and tire exports.
Figure 2
Figure 1
South Carolina Unemployment Rate
South Carolina Nonfarm Employment
3-Month Moving Averages
6%
6%
4%
4%
2%
2%
Seasonally Adjusted
12%
12%
South Carolina: Dec @ 5.5%
12-Month Moving Average: Dec @ 6.2%
10%
0%
0%
-2%
-2%
-4%
-4%
-6%
10%
8%
8%
6%
6%
4%
4%
-6%
QCEW: Yr/Yr Pct. Change: Jun @ 2.5%
Nonfarm: Yr/Yr Pct. Change: Dec @ 2.9%
Household: Yr/Yr Pct. Change: Dec @ 3.3%
-8%
-8%
-10%
-10%
90
92
94
96
98
00
02
04
06
08
10
12
14
16
2%
2%
90
92
94
96
Source: U.S. Department of Labor and Wells Fargo Securities, LLC
This report is available on wellsfargo.com/economics and on Bloomberg WFRE.
98
00
02
04
06
08
10
12
14
16
The Palmetto
State has
generally
enjoyed robust
growth in recent
years.
South Carolina in the Spotlight: February 2016
February 16, 2016
WELLS FARGO SECURITIES, LLC
ECONOMICS GROUP
A Treasure Trove of Manufacturers Now Call South Carolina Home
Economic development extends well beyond the tire industry. Three of South Carolina’s more momentous
industrial investments include General Electric, which began manufacturing power turbines in Greenville in
1968; BMW, which began assembling automobiles near Spartanburg in 1994; and Boeing, which began
assembling its 787 Dreamliner at a new plant in Charleston in 2012. All three firms have repeatedly
expanded their operations substantially since opening their first facilities and all three firms rank among the
state’s top exporters.
South Carolina’s merchandise exports grew 4.2 percent in 2015, led by a 180 percent surge in aircraft and
related parts with shipments of new Boeing commercial jets accounting for the bulk of that increase. Exports
of motor vehicles grew 7.8 percent in 2015. Nearly all of that increase came from BMW, which recently
announced that it exported $9.8 billion worth of vehicles through the Port of Charleston in 2015 and was the
nation’s leading exporter of motor vehicles by value for the second consecutive year. BMW exports more
than 70 percent of the vehicles assembled at its Greer factory. Exports of tires, South Carolina’s third-largest
export (Figure 3), fell 11.5 percent in 2015. The drop likely reflects the effect from the stronger U.S. dollar, as
well as slower global growth, particularly in the mining sector, which is a big market for earth-moving
equipment tires. While tire exports fell this past year, the industry’s continued growth in the state should
propel shipments to new highs in coming years, as additional capacity at new and existing plants comes
online.
South Carolina’s
automotive
industry is also
set to grow in a
major way.
South Carolina’s automotive industry is also set to grow in a major way. Two new assembly plants were
announced this past year in the Charleston area. Mercedes Benz announced plans to build a $500 million
factory to build Sprinter vans in North Charleston. Construction of the assembly plant is expected to begin
this year and the facility is expected to employ 1,300 workers when it is fully operational. Volvo is also
building a plant in the Charleston area. The firm broke ground on a $500 million assembly plant in
Ridgeville, located about 30 miles north of Charleston along I-26. Volvo expects to begin producing cars in
2018 and should ultimately employ 2,000 workers when the plant reaches full production.
The effect of South Carolina’s growing automotive industry is not limited to assembly plants, however. The
state has also seen a huge influx of suppliers in recent years. South Carolina has also made a concerted effort
to move up the value chain in automotive research and development. One of the biggest steps was the
establishment of the International Center for Automotive Research along I-85 in Greenville and the
Advanced Materials Research Laboratory in Anderson. Both facilities are affiliated with Clemson University
and the benefits of their research, particularly in advanced materials, extend well beyond the Automotive
sector.
While many of South Carolina’s marquee industrial announcements have been in Charleston or the Upstate,
many of the state’s rural areas, including part of the Pee Dee region, have also benefitted. The Pee Dee
region, encompassing Florence, Darlington, Dillon, Marion, Bennettsville and Cheraw counties, has long had
one of the highest unemployment rates in the state. The past few years have seen a significant influx of new
investment, however, including expansions at Honda’s ATV plant in Florence and Schaeffer’s engine
components plant in Cheraw. Job growth in the Pee Dee region during 2015 was the strongest that it has
been in eight years and the unemployment rate has fallen to its lowest level since February 2001 (Figure 4).
Figure 3
Figure 4
South Carolina Exports
Unemployment Rates
In Billions of Dollars, 2015
Seasonally Adjusted
16%
16%
Motor Cars & Vehicles
Civilian Aircraft, Engines & Parts
Tires
Motor Vehicle Parts
14%
14%
12%
12%
10%
10%
8%
8%
6%
6%
4%
4%
South Carolina: Dec @ 5.5%
2%
Turbojets, Turbopropellers & Other
Gas Turbines
2%
Pee Dee Region: Dec @ 6.9%
$0
$2
$4
$6
$8
$10
0%
2000
2002
2004
2006
2008
2010
2012
2014
0%
2016
Source: International Trade Administration, U.S. Department of Labor and Wells Fargo Securities, LLC
2
South Carolina in the Spotlight: February 2016
February 16, 2016
WELLS FARGO SECURITIES, LLC
ECONOMICS GROUP
South Carolina Employment Growth By Industry
Year-over-Year Percent Change, 3-MMA
South Carolina Employment Conditions
Total Nonfarm
Trade, Trans. & Utilities
South Carolina Nonfarm Employment
3-Month Moving Averages
6%
6%
4%
4%
More
Government
Prof. & Bus. Svcs.
Leisure and Hospitality
Number of
Employees
Manufacturing
2%
2%
0%
0%
-2%
-2%
Educ. & Health Services
Less
Financial Activities
-4%
-4%
-6%
-6%
Construction
Other Services
December 2015
Information
3-Month Annual Rate: Dec @ 3.7%
Nonfarm: Yr/Yr Pct. Change: Dec @ 2.9%
Household: Yr/Yr Pct. Change: Dec @ 3.3%
-8%
-3% -2% -1% 0% 1% 2% 3% 4% 5% 6% 7% 8%
-8%
-10%
-10%
90
92
94
96
98
00
02
04
06
08
10
12
14
Labor Force Participation Rate
16
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: Dec @ 124.0K (Right Axis)
Employed: Dec @ 2,147.6K (Right Axis)
10%
South Carolina: Dec @ 5.5% (Left Axis)
58%
South Carolina: Dec @ 59.1%
4%
600
United States: Jan @ 62.6%
55%
55%
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16
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: Dec @ -0.6%
Non-Manufacturing: Dec @ 3.8%
-8%
-8%
-16%
-16%
91
93
95
97
99
01
03
05
07
09
11
13
15
Office Employment: Dec @ 4.6%
Non-office Employment: Dec @ 3.0%
-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 in the Spotlight: February 2016
February 16, 2016
WELLS FARGO SECURITIES, LLC
ECONOMICS GROUP
South Carolina MSA Population Growth
South Carolina Economic Conditions
Population Growth 2010 - 2014, in Thousands
Sumter
0.3
Florence
1.3
South Carolina MSA Unemployment Rates
December 2015, Seasonally Adjusted
Charleston
4.8%
Spartanburg
Greenville
4.8%
Columbia
Columbia
7.7
30.8
Greenville
5.2%
36.7
Myrtle Beach
Spartanburg
39.0
5.4%
Charleston
Florence
60.0
6.4%
0
Sumter
10
20
30
40
50
60
70
6.6%
0%
2%
4%
6%
8%
South Carolina's Top 5 Export Industries
10%
2015, In Millions of Dollars
South Carolina's Top 5 Export Markets
Fabricated Metal Products
$1,180
2015, In Millions of Dollars
Mexico
Plastics & Rubber
$2,447
United Kingdom
$2,843
Canada
$3,667
Germany
$2,356
Chemicals
$2,701
Machinery
$2,706
Transportation Equipment
$3,908
$15,511
$0
China
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$10,000
$15,000
$20,000
Core Logic HPI: SC vs. U.S.
Year-over-Year Percent Change
20%
Thousands of Permits, Annual Rate
60
60
Single-Family: Dec @ 22,152
Single-Family, 12-MMA: Dec @ 23,711
Multifamily, 12-MMA: Dec @ 6,726
Thousands
South Carolina Housing Permits
Thousands
$5,000
$4,396
20%
16%
16%
12%
12%
8%
8%
50
4%
4%
0%
0%
40
40
-4%
-4%
-8%
-8%
30
30
50
Single-Family Average (1998-2003): 26,279
20
20
-12%
-12%
United States: Dec @ 6.3%
South Carolina: Dec @ 6.8%
-16%
-16%
-20%
10
10
0
0
90
4
92
94
96
98
00
02
04
06
08
10
12
14
16
-20%
90
92
94
96
98
00
02
04
06
08
10
12
14
16
Source: U.S. Dept. of Labor, U.S. Dept. of Commerce,
International Trade Administration, CoreLogic and
Wells Fargo Securities, LLC
South Carolina in the Spotlight: February 2016
February 16, 2016
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
December 2015
Government
3-Month Moving Averages
8%
8%
6%
6%
4%
4%
2%
2%
0%
0%
-2%
-2%
-4%
-4%
-6%
-6%
More
Trade, Trans. & Utilities
Prof. & Bus. Svcs.
Number of
Employees
Leisure and Hospitality
Less
Educ. & Health Services
Manufacturing
QCEW: Yr/Yr Pct. Change: Jun @ 2.8%
Nonfarm: Yr/Yr Pct. Change: Dec @ 2.5%
Household: Yr/Yr Pct. Change: Dec @ 3.2%
-8%
Financial Activities
Other Services
Information
-4%
-10%
-10%
91
93
95
97
99
01
03
05
07
09
11
13
15
0%
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
December 2015
Information
-6% -4% -2% 0%
QCEW: Yr/Yr Pct. Change: Jun @ 2.5%
Nonfarm: Yr/Yr Pct. Change: Dec @ 3.2%
Household: Yr/Yr Pct. Change: Dec @ 3.8%
-8%
-2%
-8%
2%
4%
6%
8% 10% 12% 14%
-8%
-10%
-10%
91
93
95
97
99
01
03
05
07
09
11
13
Greenville MSA Employment Growth By Industry
15
Year-over-Year Percent Change, 3-MMA
Total Nonfarm
Greenville MSA Nonfarm Employment
Trade, Trans. & Utilities
3-Month Moving Averages
10%
10%
8%
8%
Government
6%
6%
Manufacturing
4%
4%
2%
2%
0%
0%
-2%
-2%
-4%
-4%
-6%
-6%
-8%
-8%
QCEW: Yr/Yr Pct. Change: Jun @ 2.9%
Nonfarm: Yr/Yr Pct. Change: Dec @ 2.7%
Household: Yr/Yr Pct. Change: Dec @ 3.4%
-10%
-12%
93
95
97
99
01
03
05
07
Number of
Employees
Educ. & Health Services
Less
Leisure and Hospitality
Financial Activities
Other Services
December 2015
Information
-2%
0%
2%
4%
6%
8%
10%
-10%
-12%
91
More
Prof. & Bus. Svcs.
09
11
13
15
Source: U.S. Department of Labor and
Wells Fargo Securities, LLC
5
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