State’s latest economic indicators portend a ‘slowdown’

The South Carolina economy was still “growing and adding jobs in January,” but the indicators of future economic activity “are still pointing to a slowdown, giving cause for concern,” according to the latest issue of South Carolina Economic Indicators. The monthly report is published by the Division of Research at the University of South Carolina’s Moore School of Business.

The South Carolina Index of Leading Economic Indicators in January 2008 plunged to 140.2, “a new low,” according to the report. The index, which indicates future economic activity, has now dropped for six consecutive months. Coupling that trend with “a deteriorating national economy, it is hard to be optimistic and believe that economic activity in the Palmetto State will improve in the coming months,” the report said.

Statewide residential construction, one of the main drags on the index, was no longer declining in January and, in fact, was 1.1 percent higher than in December 2007. But it was still 33.7 percent below that of January 2007, “so there is no reason to be optimistic about construction,” the report said. And, single-family housing permits, an indicator of future activity in residential construction, had “one of the lowest values on record for the last 10 years,” down 66.6 percent when compared to January 2007.

Indicators for the manufacturing sector – the average manufacturing workweek and weekly earnings – also exhibited negative readings in January, showing a small loss of 100 jobs for manufacturing.

There was some good news, however. The South Carolina economy added 8,800 jobs in January, and the state’s unemployment rate dropped to 6.1 percent. (In December 2007, the unemployment rate in the state jumped unexpectedly from 5.9 percent to 6.6 percent. But the U.S. Bureau of Labor Statistics subsequently revised that data.) Overall, the report said, the “revised employment figures show that the South Carolina labor market is actually stronger than anticipated, given national trends.”

Still, the latest leading indicators in South Carolina imply that conditions in other markets “will not improve this spring,” the report said, although this could change in the summer as the effects of the economic stimulus package recently approved by the U.S. Congress and the Federal Reserve’s interest rate cuts “work their way through the economy.”