The annual rate of growth in nonagricultural employment in the Southeast slipped below 3 percent during the third quarter. Growth in Florida remained very strong at 4.2 percent, and Georgia was second at 2.5 percent. Labor markets remain tight, and the unemployment rates in each State, except for North Carolina, were at or below the levels reached 1 year ago. Despite the slight increase, the 3.5-percent rate in North Carolina was the lowest in the region. Manufacturing employment in North Carolina was down 3.4 percent in the 12 months ending August 2000. Over the past few months, three textile companies based in Greensboro have announced massive reorganizations, laying off nearly 3,000 employees. Guilford Industries and Burlington are reducing employment, and Galey and Lord is closing its denim factory in Erwin, southeast of Greensboro.

The automotive industry continues to make substantial investments in the Southeast, particularly in Alabama and Tennessee. Mercedes-Benz plans a $60 million expansion of its plant in Vance, Alabama, that will add 2,000 jobs. Fiat will open a new plant with 400 employees in 2002 in Sylacauga, Alabama, to manufacture engine parts for Ford, General Motors, and DaimlerChrysler. Honda will begin production next year of sport utility vehicles at a new $400 million plant in Lincoln, Alabama. Nissan Motor Company announced a $1 billion expansion of two facilities located in the Nashville metropolitan area, adding as many as 2,000 jobs over the next 4 years to the current employment of 5,700. General Motors has announced plans for a $1.5 billion expansion of the Saturn automobile assembly plant in Spring Hill, Tennessee.

Mississippi is also recording significant economic developments. The first cruise ships to be constructed in the United States in more than 40 years are being built by Ingalls Shipbuilding in Pascagoula. In 2003 and 2004, this firm will deliver two 1,000-passenger cruise ships to American Classic Voyages, Inc., for a price of $440 million each. A new ship systems service center at Ingalls will employ 700 people when completed. Lockheed Martin Corporation has announced plans to establish an advanced propulsion, thermal, and metrology center at the John C. Stennis Space Center in Hancock County, Mississippi. Operations are expected to begin in the fall of 2001, adding approximately 270 jobs to its current employment figure of 4,300 people.

Through September, single-family permits in the Southeast were 5.6 percent below the level for the same period in 1999, but still above the number for 1998. Only Florida registered gains in the number of permits. Overall, the sales market in the Southeast remains strong. Existing home sales in the region as of the third quarter were down 2 percent to an annual rate of 1,358,400 homes. Florida was the only State to record an increase in activity, but sales in Georgia were off less than 1 percent from a strong 1999. In Atlanta, sales were down modestly from last year's record-setting pace. Through the first half of the year, closings were down approximately 4 percent from year-earlier figures. Building permits for single-family construction in the Atlanta metropolitan area for the first 9 months of 2000 were down 2 percent. Most observers expect the market to finish the year only slightly down from last year. Shortages of materials and skilled labor have eased this year, compared with the troubles Atlanta builders faced last year. The increases in land costs and difficulties in obtaining rezonings remain concerns.

Single-family construction activity in Puerto Rico remains strong. The Federal Housing Administration (FHA) and Rural Housing Development's mortgage loans are available at 7.5 percent, while conventional, 30-year loans are between 8 and 8.5 percent. A recent FHA mortgage ceiling increase from $152,000 to $166,000 in the San Juan-Bayamon area is expected to enhance FHA's position in the single-family mortgage market.

The number of multifamily housing permits declined by almost 5 percent for the Southeast region through September, compared with the first 9 months of 1999. Activity in both Florida and Kentucky is down more than 20 percent, while Tennessee recorded a more than 40-percent increase. Multifamily permits in Georgia during the first 9 months of 2000 were up almost 50 percent, compared with the same period last year. Miami-Dade County building permit activity declined by 33 percent. Local sources indicate that land suitable for multifamily development is becoming harder to find, and the market is still correcting itself after 3 years of high-volume construction from 1997 through 1999. Apartment occupancy rates are up slightly compared with last year at this time, and the average rent increased for the sixth straight quarter.

Multifamily housing building permit activity through September is down almost 16 percent in the Raleigh-Durham metropolitan area. However, the Apartment Market Report from Carolinas Real Data indicates that there are 8,920 units under construction and 3,970 units in the planning stage in the tri-county area, making it the most active apartment market in the State. The market remains balanced with a vacancy rate of 7 percent. Vacancy rates are expected to increase during the next 12 months given the large pipeline of units entering the market.

According to the Greater Nashville Apartment Association, more than 3,000 multifamily units were under construction in the metropolitan area as of the end of the second quarter of this year. The vacancy rate dropped slightly to less than 5 percent at the end of the second quarter, down from 6 percent at the end of the fourth quarter of 1999. With an almost 27-percent drop in the number of permits through September compared with 1999, the market is expected to remain relatively tight.

Charleston is the most active apartment market in South Carolina, with a 66-percent increase in the number of permits issued through September, compared with the first 9 months of 1999. With 1,849 units under construction and an additional 1,756 units in the planning stage, rental market conditions are expected to become more competitive in 2001.

Spotlight on Savannah, Georgia

The Savannah metropolitan area had a population of 288,000 as of July 1999, an increase of 30,500, or 12 percent, since the 1990 Census. The area has the second highest rate of growth in the State behind the Atlanta metropolitan area. Economic growth continues to be strong, but recent gains have occurred at a slightly slower rate than they have during the past 5 years. During the 12 months ending August 2000, nonagricultural employment averaged 138,400, an increase of 2,700 (2 percent) over the preceding 12-month period, which was down from the average gain of 2.8 percent annually from 1995 through 1998.

The Savannah economy benefits from its strategic location and port facilities. The area's transportation and distribution networks have produced increased economic activity and development, such as distribution centers for Wal-Mart and Home Depot. The Port of Savannah, one of the busiest ports on the eastern seaboard, recorded a 5.4-percent increase in tonnage during the 12 months ending June 2000. Two large shipping companies, Maersk Sealand and Evergreen Marine Corporation, recently announced that they would add 40,000 containers a year to Savannah. Given the increase in activity, the Port Authority plans to add storage capacity, berthing, and an intermodal facility. A harbor deepening project to accommodate larger ships is also under consideration.

Tourism also has been a significant force in Savannah's recent economic growth. Approximately 2,000 hotel rooms have been added during the past 5 years. Double-digit increases in hotel-motel tax collections were reported for Savannah, unincorporated Chatham County, and Tybee Island during the second quarter of 2000, compared with the same period in 1999. The largest recent development in the tourist industry is this year's completion of the 403-bed Westin Savannah Harbor Resort on Hutchinson Island across the Savannah River from the historic downtown area. The resort is adjacent to the new $81 million Savannah International Trade and Convention Center that was completed in May of this year.

British-based JCB, Inc., the world's fifth-largest manufacturer of construction equipment, began production in February at its $62 million U.S. headquarters and plant in Pooler in western Chatham County. Another major development is the recent announcement by Gulfstream of its plans to hire approximately 100 engineers to support the development of a new $42 million airplane.

The area has a significant student population. In addition to the Savannah College of Art and Design, the area is also home to Armstrong State College, Savannah State University, Savannah Technical Institute, and South College, which collectively have more than 16,000 students.

A total of 1,028 single-family units was issued building permits in the metropolitan area in the first 9 months of 2000, a 16-percent decline from the same period in 1999. The Savannah Board of REALTORS® reported that 2,639 homes were sold during the first 8 months of 2000, almost equal to the number sold during the same period in 1999. The average sales price for homes sold through August 2000 was $159,000, up 7.4 percent over the average price of $147,900 for the first 8 months of 1999.

The rental housing market in the Savannah area currently is balanced. A monthly apartment survey prepared by MARJAC® Publications, Inc., indicated that during September 2000, occupancy in Savannah-area apartment properties was 92 percent. Following the student population, apartment occupancy is typically lower in summer and higher in fall. Occupancy levels have remained relatively stable in the area even with the significant increase in multifamily construction activity. During 1998, permits were issued for 1,200 multifamily units, the highest annual total since the mid-1980s. Multifamily activity last year dropped to 543 units, and, for the first 9 months of 2000, permits were issued for only 386 multifamily units. Most of the recent production in the Savannah area has been in amenity-rich apartment developments.

Announced affordable housing projects include 243 new mixed-income apartment units in the Benjamin Van Clark Park neighborhood to replace 315 public housing units. A combination rehabilitation and new construction project in the Cuyler-Brownsville neighborhood will create 88 units of affordable rentals. The project, named Heritage Place, involves the rehabilitation of Charity Hospital and Florance Street School, two structures that stand gutted. The former hospital will contain 25 units, the school will contain 27 units, and a new building will contain 36 units.