Forecast: Domestic-Demand Sectors Will Drive Georgia Job Growth
Georgia’s job creation in the first six months of 2018 primarily arose from domestically driven sectors, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business.
The state created 36,300 jobs in the first half of the year, lower than the last half of 2017 and opposite the U.S. trend of slight acceleration in job growth.
“In the first half of 2018, domestically driven sectors, chiefly hospitality, education, healthcare, construction and retail trade, created 40,000 jobs,” Dhawan wrote in his quarterly “Forecast of Georgia and Atlanta” released Aug. 29. “Meanwhile, globally connected sectors (such as manufacturing, corporate, information and transportation) lost 3,700 jobs.”
Trade uncertainty and a strong dollar resulted in weaker job growth in manufacturing, but the primary cause of the deviation from the national trend was a drop in corporate employment.
“Surprisingly, corporate sector employment dropped by 6,000 positions in the first half of 2018,” Dhawan wrote. “These two Peach State trends, weak gains in manufacturing and job losses in the corporate sector, are not evident in national figures.”
Despite the recent lack of job growth in the large corporate sector, job losses from this sector have not spilled over into the rest of the economy. As evidence, Dhawan points to his triangle of money concept, which looks at tax collections to form a complete picture of job quality and purchasing power.
“Georgia’s state tax revenues, such as gross sales receipts, are not showing any weakness,” Dhawan said. “Thus, moderation in corporate sector job growth is likely an aberration in the data and will get sorted out in next year’s benchmarking release.”
Corporate expansions in Atlanta, Brunswick, Carrolton and Demorest, along with decisions by healthcare technology companies to locate in Atlanta, are leading to job growth in healthcare and construction, buoying overall job growth and reflecting an underlying growth trend.
Medium- and small-sized businesses also are trending positively, Dhawan said.
“The news of expansion and headquarter relocations, especially for medium-sized firms, is reassuring,” he said. “Due to steadily climbing consumer confidence, the prognosis also is good for small businesses that mostly depend on domestic demand.
Domestic demand also has positively affected the hospitality sector, which experienced strong gains in the first half of 2018 through a 20 percent increase in rooms booked over the last six months of 2017.
Dhawan anticipates the negatives of global pressures on catalyst sectors will be offset in 2018 by the positives of recent tax cuts and rising confidence among consumers and small businesses, driving domestic demand sectors and resulting in a continuation of 2017’s job growth trend.
Highlights from the Economic Forecasting Center’s Report for Georgia and Atlanta
- Georgia will add 78,400 jobs (12,500 premium jobs) in 2018, 61,700 jobs (11,800 premium) in 2019 and 54,800 (10,800 premium) in 2020.
- Nominal personal income will rise 4.4 percent in 2018, 5.2 percent in 2019 and 5.2 percent in 2020.
- Atlanta will add 53,600 jobs (9,400 premium jobs) in 2018, 42,900 jobs (9,100 premium) in 2019 and 39,500 jobs (8,400 premium) in 2020.
- Atlanta permitting activity in 2018 will rise 11.7 percent, fall 1.3 percent in 2019 and rise 0.7 percent in 2020.