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By Michael Pakko, May 17, 2013 10:32 AM

Arkansas’ unemployment rate fell slightly in April, declining from 7.2% to 7.1%.  The household survey reported that employment increased by nearly 1,700 and unemployment dropped by more than 800.  The resulting increase in the labor force interrupted a string of 14 consecutive monthly of declines.   The April increase is a welcome change.  Nevertheless, from its recent peak in January 2012, the Arkansas labor force has experienced a cumulative contraction of 36,800.

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)

The 0.1% decline in Arkansas’ unemployment rate matches the drop in the national rate reported for April.  Compared to a year earlier, however, Arkansas unemployment rate has declined by only 0.2%, compared to a drop of 0.6% for the nation as a whole.

Source: Bureau of Labor Statistics

Payroll Employment
Arkansas nonfarm payroll employment increased by 4,500 for the month (seasonally adjusted*) — the largest monthly gain since October of 2012.   Employment in goods-producing sectors was essentially flat, with the job gains concentrated in service providing sectors.  Increases were notable in Professional & Business Services (+2,200) and in Retail Trade (+2,200).  For the first four months of the year, job growth in Arkansas has averaged over 2,000 per month.

Source: Bureau of Labor Statistics, Current Employment Statistics (CES)

Since the employment trough of February 2010, cumulative employment growth has added 38,800 jobs to Arkansas payrolls, representing about two-thirds of the jobs lost between December 2007 and February 2010.  Total nonfarm payroll employment in April was 1.5% below its pre-recession peak.  For the entire United States, April employment remained 1.9% below the pre-recession peak.

Source: Bureau of Labor Statistics

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By Michael Pakko, May 7, 2013 3:50 PM

Information from last week’s General Revenue Report suggested continued slow growth in Arkansas Taxable Sales.  Sales and Use tax collections in April were down 2.5% from April 2012, and were 6.5% below forecast.  For the first quarter of 2013, Arkansas Taxable Sales (ATS) increased 0.2% from the previous quarter (seasonally adjusted).  Following a 3.3% increase in the first quarter, ATS is now up 0.5% from the previous year, having offset the declines we saw in the second and third quarters of 2012.

Sales of gasoline were up 0.3% in 2013:Q1, so the gasoline component of Arkansas Taxable Sales Including Gasoline (ATSIG) had little effect on the total.  ATSIG was up 0.2% from the previous quarter and was unchanged from the previous year.

Sources: Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

Sources: Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

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Arkansas Taxable Sales (ATS) is calculated by the Institute for Economic Advancement to serve as a timely proxy for Arkansas retail sales. The series is derived from sales and use tax data, adjusting for the relative timing of tax collections and underlying sales, changes in tax laws, and seasonal patterns in the data.  Arkansas Taxable Sales Including Gasoline (ATSIG) incorporates data on the state motor fuel tax and gasoline prices from the Oil Price Information Service.

A spreadsheet of the data is available here: Arkansas Taxable Sales 2013:Q1 (Excel file)

* Data are preliminary until the release of the DFA report, Arkansas Fiscal Notes for April 2013, and will be updated when information becomes available.   The preliminary data also include model-based estimates of gasoline sales for March.  Final figures will incorporate official estimates from DFA’s Motor Fuel Tax section.

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By Michael Pakko, May 2, 2013 1:23 PM

The Arkansas Realtors® Association (ARA) announced this morning that March home sales were up 7% from the previous year.  Sales in the first two months of the year had been somewhat volatile, with year-over-year sales up 11.6% in January but down 1.6% in February.  As shown in the figure below, home sales typically start out slow in the early months of the calendar year, reaching a peak in the summertime.  The sharp ramp-up in March bodes well for the outlook for the rest of the year.  In fact, the volume of sales in March 2013 was the highest level we’ve seen for that month since 2010, when the Federal home-buyer’s tax credit was in its penultimate month.

Source: Arkansas Realtors® Association

After seasonally adjusting the data, the zero-growth trend in home sales over the past two years is evident.  But seasonally adjusted sales in March were well above the 2000 homes-per-month pace that seems to have constrained the market in 2011 and 2012.

Source: Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement

Perhaps the most important aspect of this morning’s report is the cumulative sales total for the first quarter of the year.  The ARA statistics showed a 5.2% increase in year-to-date sales compared to 2012.  After seasonal-adjustment of the quarterly data, the figure below shows a sharp upturn in 2013:Q1.

Source: Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement

Home sales and residential construction have been among the weakest sectors in the current economic recovery, in spite of historically low mortgage rates and relatively low home prices.  The home sales data for January through March of 2013 suggests that the long-awaited recovery in Arkansas residential real estate markets might finally be emerging.

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By Michael Pakko, April 19, 2013 12:00 PM

The unemployment rate in Arkansas was unchanged at 7.2% in March.  The household survey suggests that the number of unemployed has stabilized at approximately 96,000, but ongoing decline in household employment continued for a 13th consecutive month.  Since February 2012 household employment has dropped by approximately 32,600 and the corresponding measure of the state’s labor force has dropped by 37,700.  If this entire decline in employment was classified as an increase in unemployment (instead of as a reduction in the labor force), the state’s unemployment rate would now stand at 9.7%.

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)

Payroll Employment
The payroll survey continued to show greater strength than the household report.  Total nonfarm payroll employment was up by 2,400 in March (seasonally adjusted), following a revised increase of 3,000 in February.  As shown in the table below, job losses were particularly notable in Leisure and Hospitality Services and Manufacturing.  Without seasonal adjustment, employment in Leisure and Hospitality was up slightly (700 jobs), but that increase is far smaller than would typically be expected in March.  Sectors with notable increases in employment included Construction and Business & Professional Services.

Source: Bureau of Labor Statistics, Current Employment Statistics (CES)

The two measures of state employment — the household survey and the payroll survey — continue to provide conflicting signals.  The household measure of employment has now declined to a new post-recession low, while the payroll survey has shown positive growth (albeit slow and uneven) since February 2010.  Except for the most recent observations (which are still subject to future revision) the payroll figures are based on a very inclusive and comprehensive set of data.  This suggests that the anomalous reading are coming from the household survey.  However, we cannot rule out the possibility that the household survey is documenting significant weakness in Arkansas labor-market trends that have yet to be fully reflected in the payroll data.  Stay tuned.

Source: Bureau of Labor Statistics (LAUS & CES)

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By Michael Pakko, April 10, 2013 12:19 PM

Unemployment rates in Arkansas’ metro areas generally remain lower than a year ago, but smoothed seasonally adjusted estimates show recent increases in some areas of the state.

The not-seasonally adjusted unemployment rate data showed that February-to-February changes in unemployment rates ranged from -0.9% in Fort Smith to +0.1% in Memphis (Memphis is the only metro area that showed a year-over-year increase).   According to the news release from the Bureau of Labor Statistics, unemployment rates were lower in February than a year earlier in 287 of the nation’s 372 metro areas and higher in only 69 areas.

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)

In the most recent report on employment and unemployment for the state, we noted that the Arkansas labor force has been declining precipitously over the past year.  From February 2012 through February 2013, the state’s labor force declined by 2.8% (using not-seasonally adjusted data).  As shown in the table below, not all of Arkansas’ metro areas have experienced comparable declines.  Over the past 12 months, Fort Smith and Jonesboro have both seen increases in the size of their labor forces, while Fayetteville’s labor force is down only slightly.  The state’s largest declines are in Pine Bluff and Texarkana, with Hot Springs and Little Rock also showing contractions that are proportionally larger than the statewide total.

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics

Monthly changes in the Smoothed Seasonally Adjusted Estimates of metro area unemployment rates were mixed:  Rates were lower in Fayetteville and Fort Smith; unchanged in Hot Springs and Jonesboro; and were higher in Little Rock, Memphis, Pine Bluff and Texarkana.

Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Estimates

The February changes in unemployment rates contributed to some recent divergence among the state’s metro areas.  For example, the unemployment rate in Fort Smith has now fallen by 0.6% since last October, while the rate in Pine Bluff has risen by 0.4% since September.

Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Estimates

Payroll Employment
Data on nonfarm payroll employment showed month-to-month declines in Hot Springs (-1.0%) and Texarkana (-0.5%), but increases in the state’s other metro areas.  Compared to a year earlier, employment is higher in most metro areas, but down in Pine Bluff and Texarkana.  Pine Bluff is the only metro area that has experienced ongoing job losses since the employment trough of February 2010.  Two metro areas — Fayetteville and Jonesboro — have higher levels of employment now than before the onset of the 2008-09 recession.

Source: Bureau of Labor Statistics, Current Employment Statistics

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By Michael Pakko, March 29, 2013 12:30 PM

The Arkansas unemployment rate was in February was 7.2%, unchanged from the previous month.  New data from the Bureau of Labor Statistics and Department of Workforce Services showed that the number of unemployed declined by nearly 600, partly offsetting the January increase.  However, the February household survey also showed a sharp decline in employment for a second consecutive month.  The two-month decline in employment with little change in unemployment implies a sharp contraction of the labor force.  This was the for 13th consecutive monthly decline in the size of the labor force, with an apparent acceleration of the trend during the first two months of 2013.  Since January 2012, the labor force has fallen by more than 30,000 — about 2.2%.

Source: Bureau of Labor Statistics

Payroll Survey
Nonfarm payroll employment was up by 2,800 in February (seasonally adjusted*).  For the first two months of the year, payroll employment rose by only 600, and is essentially unchanged (+800) from October of 2012.  As detailed in the table below, employment was up for the month in each of the goods-producing sectors and in most of the service-providing sectors as well.  The only monthly declines were in Information Services, Financial Services, and Other Services.   Employment in most sectors has increased over the past year, and most have shown positive growth since the post-recession employment trough of February 2010.  Notable exceptions are Construction, Manufacturing, Information Services, and Other Services.  Overall, employment is up 31,000 since the February 2010, a recovery of approximately 54% of the jobs that were lost during the recession.

Source: Bureau of Labor Statistics

The overall employment trends indicated by the household survey and the payroll survey have been diverging in the first part of 2013.  As shown in the figure below, the two data sources rarely provide identical signals about short-term employment changes, yet they generally show similar trends. However, the sharp decline in household employment in January and February clearly contrasts with the relatively unchanged employment profile suggested by the payroll survey.  Ordinarily, economists tend to rely more on the payroll figures as providing a more complete and accurate assessment of labor market conditions.  But as we have recently seen, the payroll employment statistics are preliminary and subject to future revision.  As additional employment data are released in the coming weeks and months, we’ll be closely monitoring the relative performance of the household and payroll employment statistics, seeking to reconcile the conflicting signals they seem presently to be providing.

Source: Bureau of Labor Statistics

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By Michael Pakko, March 28, 2013 2:52 PM

Final figures are now available for Arkansas Taxable Sales (ATS) in 2012.  After two quarters of contraction, taxable sales rebounded sharply in the fourth quarter of the year.  Not including gasoline, ATS increased by 3.5% in the fourth quarter — a larger increase than had been indicated by preliminary data.   With gasoline prices down slightly in the fourth quarter, total gasoline sales increased by only 0.8%.  Consequently, the increase in Arkansas Taxable Sales Including Gasoline (ATSIG) was slightly smaller than ATS growth:  3.2%.  On a year-over-year basis, ATS and ATSIG were up 1.3% and 1.2%, respectively, in the fourth quarter.

Sources: Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

The downturn in taxable sales during the second and third quarters of 2012 has been something of a mystery.  In particular, it seemed to be taking place against a backdrop of fairly steady economic growth suggested by other economic indicators.  However, recent data revisions to personal income and employment have provided corroborating evidence that economic activity slowed noticably in the third quarter.  The 2012 experieence shows how sales tax data can sometimes provide more accurate and timely information about the state of the Arkansas economy than the “official” data produced by Federal government agencies (which are often subject to considerable revision over time).

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Arkansas Taxable Sales (ATS) is calculated by the Institute for Economic Advancement to serve as a timely proxy for Arkansas retail sales. The series is derived from sales and use tax data, adjusting for the relative timing of tax collections and underlying sales, changes in tax laws, and seasonal patterns in the data.  Arkansas Taxable Sales Including Gasoline (ATSIG) incorporates data on the state motor fuel tax and gasoline prices from the Oil Price Information Service.

A spreadsheet of the data is available here: Arkansas Taxable Sales 2012:Q4 (Excel file)

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By Michael Pakko, March 27, 2013 12:55 PM

The Bureau of Economic Analysis released new data on state personal income this morning.  In Arkansas, personal income rose by 2.2% for the quarter, compared to a 1.9% growth rate nationwide.  Arkansas’ growth rate for the quarter was the 12th highest in the nation.  Data for the third quarter were revised downward, but growth for the entire year remained relatively strong at 4.9% (Q4/Q4).

As shown in the figure below, personal incomes in Arkansas have risen to a level that is 9.3% higher than the previous cyclical peak (in 2008:Q2).  By comparison, U.S. personal income is 8.3% higher over the same period.  These figures do not include the effects of inflation, however.  After accounting for price increases of approximately 6.7% over the period (as measured by the price index for personal consumption expenditures), real personal income is up 2.4% in Arkansas and 1.9% for the U.S.

Source: Bureau of Economic Analysis

The press release noted particularly strong growth in the fourth quarter, citing special and accelerated dividend payments that were associated with end-of-year expectations for higher income tax rates in 2013.  The report also cited accelerated bonus payments and other irregular pay in anticipation of tax rate changes.  These effects had their largest impacts on states where the finance industry is particularly prominent.

The BEA report also noted the impact of severe heat and drought on agricultural production and income in the summer and fall of 2012.  Although the impact of these weather-related effects were fairly large and negative for states in the upper Midwest and great plains states, the impact on farm incomes in Arkansas was positive.  Record crop yields and high prices combined to boost Arkansas farm incomes by 44% over their levels in the fourth quarter of 2011.

The table below compares annual growth rates in total personal earnings for Arkansas and the U.S.  For the year in total, earnings growth was 2.6% in Arkansas, compared to 3.3% for the U.S.  Sectors generating large income gains included Farming, Utilities, and Management of companies.  Industries in which Arkansas earnings growth lagged the nation included Mining, Nondurable goods manufacturing, and Finance and Insurance.

Source: Bureau of Economic Analysis

With data now available for the year as a whole, today’s report also highlighted new measures of per-capita income in 2012.  Per capita personal income in Arkansas was estimated at $34,723 — about 81% of the national average ($42,693).  This ranked Arkansas #45 among the 50 states.  As noted in a previous post, the real purchasing power of incomes are affected by regional differences in the cost of living.  Updated estimates of regional price parities will come out later this summer (scheduled for June 12).  For now, using the 2006-2010 estimates of regional price differences, price-adjusted per capita income in Arkansas amounted to 91% of the national average in 2012, moving the state up to #41 in the rankings (not including D.C.)

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By Michael Pakko, March 22, 2013 11:53 AM

The Bureau of Labor Statistics (BLS) announced new data on metro area employment and unemployment this morning. The BLS news release noted that unemployment rates were lower in January 2013 than a year earlier in 227 of the nation’s 372 metropolitan areas.  Most of Arkansas’ Metropolitan Statistical Areas (MSAs) fall into this category, with the exception of Memphis and Pine Bluff.  The largest year-over-year declines were in Fayetteville (-0.4%), Jonesboro (-0.3%), and Texarkana (-0.3%).

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)

A look at the month-to-month changes in unemployment rates around the state might appear as cause for alarm.  As shown in the table below, unemployment rates were up sharply, with increases ranging from +0.6% in Fort Smith to +1.5% in Pine Bluff and Texarkana.

However, the primary explanation for these large increases is seasonal variation.  With the end of the holiday shopping season, cold weather suppressing construction activity, and many public schools still on winter break, unemployment always rises in January.  Indeed, the not-seasonally-adjusted numbers for statewide unemployment show an increase of more than a full percentage point in January — in contrast to the +0.1% (seasonally adjusted) that was headlined earlier this week.

Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)

The figure below illustrates the annual seasonal pattern for statewide unemployment rates.  Seasonal patterns for metro areas often have distinctive characteristics, but generally follow a similar pattern.  On average, the unemployment rate rises from December to January by nearly a full percentage point — due solely to recurring seasonal factors.  Looking ahead, the good news is that seasonal factors typically drive the unemployment rate down by more than one-half of a percentage point in both March and April.

These recurring swings in unemployment are interesting illustration of the seasonal cycle, but they can get in the way of evaluating labor market conditions relative to the business cycle.  That is, if we are interested in evaluating the recovery of labor markets from the last recession, seasonal components can give misleading signals when comparing monthly changes in not-seasonally-adjusted data.

Sources: Bureau of Labor Statistics, author’s calculations

The value of seasonal adjustment is that it removes the seasonal component leaving only the cyclical component (ideally, at least).  Although national and state unemployment rates are routinely released in seasonally-adjusted form, the metro area data are not — at least not in the “headline” news release.  However, the BLS does publish Smoothed Seasonally Adjusted Estimates, which are summarized for Arkansas’ metro areas for January 2013 in the table below.

By these estimates, unemployment rates were higher in Memphis, Pine Bluff, and Texarkana — but only by two- to three-tenths of a percentage point.  Rates were unchanged in Hot Springs, Jonesboro, and Little Rock.  After seasonal adjustment, unemployment rates were actually down for the month in Fayetteville and Fort Smith.

Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Estimates

These statistics are far from perfect, and one should never put too much emphasis on data for a single month.  Nevertheless, they provide better information on the cyclical state of labor markets in Arkansas (i.e., how they are recovering relative to the last recession) than the not-seasonally adjusted estimates.

Payroll Employment
The annual benchmark revisions to the metro area payroll employment statistics were described in a previous post.  The table below summarizes the newly-revised data for January 2013.  From December to January, payroll employment was up in Fayetteville, Fort Smith, Hot Springs and Jonesboro.  Declines were registered for Little Rock, Memphis, Pine Bluff, and Texarkana.

Compared to January 2011, employment is higher or essentially unchanged in all of Arkansas’ metro areas except Pine Bluff.  Pine Bluff is also the only metro area that has experienced an ongoing contraction since the statewide employment trough of February 2010.  With the newly-revised data, only Fayetteville and Jonesboro have employment levels higher than before the onset of the last recession (December 2007).

Source: Bureau of Labor Statistics, Current Employment Statistics (CES)

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By Michael Pakko, March 20, 2013 2:18 PM

The Bureau of Labor Statistics (BLS) won’t release its summary of metro area employment data until this Friday (March 22), but the annual revisions to payroll employment data have been available since the revised state-level data came out on Monday. The table below summarizes the magnitude of the data revisions and their impact on year-over-year growth rates for Arkansas’ metro areas.   The revised data result in higher measured levels of employment in most of the metro areas, with the only downward revisions being Pine Bluff and Texarkana.

Source: Bureau of Labor Statistics

In some cases, the level of 2012:Q4 employment was revised upward but the annual growth rate ended up lower.  Jonesboro is a prominent example.  The explanation for this phenomenon is that upward revisions to employment data for 2011:Q4 were even larger than the upward revisions for the end of 2012.  The set of figures below illustrates this pattern with particular clarity in the Jonesboro case.  Another interesting case is Fort Smith, which experienced the largest proportionate revision to the level of measured employment, but with little effect on its annual growth rate because the revision affected levels of employment for the entire year.

Source: Bureau of Labor Statistics

A comparison of the actual data revisions with the expected revisions previously posted on Arkansas Economist reveals some notable differences.  For example, the expectation was for Fayetteville to experience a downward revision, when the actual revision was positive.  Data for Little Rock were expected to show little change, but the actual revision was fairly substantial.  There are two explanations for these forecast errors.  First, the data for metro areas are fundamentally more volatile than the state level data, making them more difficult to predict.  Idiosyncratic local circumstances can contribute to sharp swings in the metro area data that end up being netted-out in state-level and national data.

More important, the BEA updated its methodology for benchmark revisions this year, incorporating more up-to-date readings from the Quarterly Census of Employment and Wages (QCEW).  In particular, the BLS used QCEW data through September 2013 for this year’s revisions.  Our “forecasted revision of history” would have been more accurate if we had used QCEW data for the second quarter, but we still would have missed the information from the third quarter data (which are not yet publicly available).  Although the updated methodology makes it more difficult to anticipate the nature and magnitude of upcoming data revisions, the good news is that the revised data are now more accurate and up-to-date than they have been in the past.  This should reduce the impact of future benchmark revisions, making the annual benchmarking process less significant in evaluating recent trends.