Arkansas Employment and Unemployment – June 2014

By , July 18, 2014 10:33 AM

The unemployment rate in Arkansas dropped two-tenths of a percentage point in June, falling to 6.2%.  The change matches a similar decline in the U.S. unemployment rate, which stood at 6.1% in June.  The underlying data from the Bureau of Labor Statistics and Arkansas Department of Workforce Services showed a 10th consecutive monthly decline in the number of unemployed – down nearly 2,600 to approximately 81,600.  As recently as October of last year, the number of unemployed Arkansans remained above 100,000.  Over the past 12 months, the number of unemployed has fallen by over 19,000.

However, the other component of the unemployment rate, the number of employed, continues to be a source of concern.  The household-survey measure of employment fell by 6,700 in June, bringing the cumulative 3-month decline to nearly 14,500.   As a result of these changes, the labor force fell by 9,300 for the month, and has fallen by more than 24,600 over the past three months.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Recent data demonstrate that a decline in the unemployment rate cannot always be interpreted positively.  If, in fact, the decline in the number of unemployed reflects discouraged workers dropping out of the labor force, then the falling unemployment rate might be a misleading signal.  For example, suppose that the decline in unemployment over the past three months was entirely attributable to the discouraged-worker effect:  If we assumed that those 10,234 Arkansans remain unemployed in a true sense of the word, then the measured unemployment rate in June might be more appropriately calculated as 7.0%.   The sweeping assumption that unemployed workers are giving up on their job searches is surely an exaggeration, and the data are subject to future revision.  But as it stands now, the sharp contraction of the Arkansas labor force that we’ve seen over the past three months is a cause for concern.

Payroll Employment
Data from the survey of employers reinforces concern about weak employment growth.  Nonfarm payrolls were down 3,300 in June (seasonally adjusted).  Payroll employment remains more than 14,000 higher than a year ago, but most of those gains occurred during the latter part of 2013.  Over the first 6 months of this year, employment has increased by only 1,700.

As shown in the table below, employment declines hit every category of service-providing sectors.  The largest declines were in Professional & Business Services and Education & Health Services — two areas that have previously been showing strong growth trends.  The news was more positive in the goods-producing sectors.  Manufacturing employment surged by 1,700, and employment in Construction increased as well.  Despite recent gains, employment in both Manufacturing and Construction remain lower than they were at labor market trough in February 2010, and together those two employment categories account for cumulative job losses of over 41,000 since the start of the 2008-09 recession.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

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*Seasonally adjusted data for Arkansas nonfarm payroll employment, reported in a format compatible with the monthly news release from the Arkansas Department of Workforce Services, can be found hereTable-Seasonally Adjusted NFPE.

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Metro Area Unemployment and Employment – May 2014

By , July 1, 2014 1:26 PM

Unemployment rates in Arkansas’ metro areas continue to trend downward.  For the period from May 2013 through May 2014, not-seasonally adjusted data from the Bureau of Labor Statistics show declines ranging from 0.9 percentage points in Fayetteville and Little Rock to 1.7 percentage points in Memphis.  Statewide, the unemployment rate has fallen 1.1 percentage points over the past 12 months.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

On a month-to-month basis, the not seasonally adjusted data indicate that unemployment rates moved higher in May.   However, this is a typical seasonal effect.  Unemployment rates usually rise in the early to mid-summer — in part due to effects related to the end of the school year.   After adjusting for these recurring seasonal patterns, unemployment rates declined in May for all eight of Arkansas’ metro areas.  The Smoothed Seasonally Adjusted Metropolitan Area Estimates show declines of 0.2 percentage points in Jonesboro, Pine Bluff and Texarkana; and declines of 0.1 percentage points in the other five metro areas.  A graph of the smoothed seasonally-adjusted estimates (below) illustrates the downward trend that has prevailed across all of Arkansas’ metro areas since late last summer.

Source: Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Payroll Employment
In the other half of the metropolitan area report, payroll employment continued to be disappointingly weak across the state.  Total employment was down in six of the eight metro areas, with small increases in Fayetteville and Memphis.  Compared to a year ago, employment is higher in all metro areas except Texarkana — but the gains are relatively small.  Year-over-year employment growth has been positive but less than one percent in Fort Smith, Memphis and Pine Bluff.  Payroll employment is still lower than its pre-recession peak an all metro areas except Fayetteville and Jonesboro.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

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Arkansas Personal Income – 2014:Q1

By , June 24, 2014 3:43 PM

New figures came out this morning showing that Arkansas personal income declined by 0.2% in the first quarter.  Data for the fourth quarter of 2013 were also revised downward to show a 0.2% decline in that quarter as well.  Compared to the first quarter of 2013, the new data indicate year-over-year growth of 1.0%.  The weakness in Arkansas income was concentrated in farm income.  The report from the Bureau of Economic Analysis noted that first-quarter farm earnings declined by more than $1 billion in each of several agricultural states, including North Dakota, Minnesota, Iowa, Arkansas and Nebraska.  The report noted that the declines reflected falling crop prices.  Nonfarm income in Arkansas increased 0.9% in the first quarter, and was up 2.8% from the first quarter of 2013.

PI-2014Q1-map

The declining income in Arkansas over the most recent two quarters contrasts with modest but positive growth in personal income nationwide.  For the U.S. as a whole, personal income was up 0.8% in the first quarter following a (revised) 0.5% increase in the fourth quarter of last year.  The most recent data puts U.S. personal income 14.8% higher than its pre-recession peak.  For Arkansas, first quarter income was 13.6% higher than the previous cyclical peak.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Over the past four quarters, the price index for personal consumption expenditures increased by 1.1%.  Hence, on an inflation-adjusted basis, real incomes in Arkansas have fallen 0.1% over the past year.  For the U.S., real income increased by 2.5% over the same period.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The table below shows the critical role that declining farm income played in the first quarter report.  Total earnings (which includes wages and salaries, supplements to wages and salaries, and proprietors income) contributed -.42% to the quarterly decline in Arkansas personal income. The contribution of farm income to that total was more than a full percentage point.  All other sectors combined contributed +0.65% to personal income growth.  Some sectors showed notable growth, including Construction and Nondurable goods manufacturing.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

 

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Arkansas Employment and Unemployment – May 2014

By , June 20, 2014 12:44 PM

The Arkansas unemployment rate declined another two-tenths of a percent in May, falling to 6.4%.  The unemployment rate has fallen for eight consecutive months, and is now 1.1% lower than it was in May of 2013.  The Arkansas rate has been declining along with the national unemployment rate, which stood at 6.3% in May. URATES-AR&US-0514

For the second consecutive month, however, the unemployment rate drop was accompanied by a sharp decline in the labor force.  The number of unemployed dropped by 2,637 in May, and was down 7,649 since March.  But we have not been seeing a commensurate increase in the number of  employed Arkansans.  Rather, the number of employed has declined by 7,776 over the past two months.  As a result, the labor force declined by 15,425 during April and May.  The declining labor force is something of a puzzle.  With labor market trends appearing to be on an improving trend, we would expect to see discouraged job-seekers re-enter the labor force, boosting participation rates and unemployment rates.  Instead, we’re seeing the reverse.  It might be the case that some job-seekers are leaving the labor force out of frustration, but it might also be the case that job seekers are leaving the Arkansas labor force in favor of finding jobs elsewhere.  The declining labor force might also reflect a cohort of newly retired baby-boomers dropping out of active labor force participation.  Two months is not long enough to establish a trend, but this development is worthy of monitoring closely over the next few months.

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

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

Payroll Employment
The separate survey of employers showed nonfarm payroll employment down by 400 in May (seasonally adjusted).  Sectors losing jobs in May included Construction, Manufacturing, and Retail Trade.  Employment was down in most service sectors as well.  A notable exception was Education and Health services, which increased by 2,500 jobs.  Over a longer span of time, payroll employment is maintaining a respectable growth rate.  Since May 2013, total employment is up by over 14,000 jobs, and we’ve seen the creation of nearly 39,000 jobs since the trough of February 2010.  Nevertheless, Arkansas employment remains more that 18,000 jobs lower than it was before the recession began in December 2007.

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

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

Considering the employment gains of the past 12 months, there are two distinct subperiods.  During the latter part of 2013 we saw significant job growth, with an increase of nearly 15,000 jobs in the period from May 2013 through January 2014.  So far this year, however, job growth has stalled.  From January through May 2014, total payroll employment has declined slightly.  Some of the slowdown is likely associated with harsh winter weather that we experienced in the first part of the calendar year.  More recent weakness in payroll employment growth parallels the reversal of employment gains that we’ve seen in the household survey.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

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*Seasonally adjusted data for Arkansas nonfarm payroll employment, reported in a format compatible with the monthly news release from the Arkansas Department of Workforce Services, can be found hereTable-Seasonally Adjusted NFPE.

 

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Arkansas GDP in 2013

By , June 11, 2014 2:52 PM

The Bureau of Economic Analysis announced this morning that Arkansas GDP growth in 2013 was 2.4%, up from a revised growth rate of 1.1% in 2012.  Arkansas’ growth rate was well above the national average of 1.8%, and ranked #16 among the 50 states. gsp_0614

Today’s report included a comprehensive set of revisions that affected the data going back to 1997. Although Arkansas’ growth rate in 2012 was revised downward, the revisions generally paint a picture of stronger long-term growth for the state.  As shown in the figure below, the immediate post-recession years of 2010 and 2011 saw much stronger growth than previously estimated.  Growth in 2003 through 2008 was also revised upward.  Cumulatively Arkansas GDP growth is now reported to have increased by 28.3% over the 10 years from 2002-2012, up from a previously-reported total of 16.5%.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

After the data revisions, Arkansas growth over the past several years is now estimated to have exceeded that of the U.S. as a whole.  The 2009 drop in output was previously estimated to have been smaller than the national average, but it is now reported to have been about the same (-2.7%).  Nevertheless, stronger growth in the decade before the recession — as well as in 2010 and 2013 — result in a significant cumulative improvement for Arkansas.  In per capita terms, Arkansas real GDP (in 2009 dollars) increased from $33,828 in 2003 to $39,111 in 2013 (an increase from 73.7% of the national average to 79.6%).

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Over half of Arkansas’ growth in 2013 came from natural resource sectors:  Agriculture, forestry, fishing and hunting contributed over half of a percentage point to total growth and Mining accounted for more than a full percentage point.  The BEA news release noted that these sectors figured prominently in national growth patterns.  The Agriculture, etc. component contributed positively to growth in 49 states plus the District of Columbia.  Mining “was not a significant contributor to real GDP growth for the nation,” but it did boost the growth rates of some of the fastest growing states in the nation.  For example, mining accounted for 3.61 percentage points of North Dakota’s 9.7 percent growth.

Some sectors in Arkansas’ economy remain relatively weak, however.  Construction had a positive contribution to growth nationwide, but subtracted from growth in Arkansas.  Manufacturing in Arkansas showed essentially zero growth over the year, while it added 0.4% to the U.S. growth rate.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

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Metro Area Unemployment & Employment – April 2014

By , May 28, 2014 4:42 PM

The national and state unemployment reports for April had shown a distinctive combination of statistics:  relatively large declines in unemployment rates, accompanied by sharp drop-offs in labor force participation.  Data for Arkansas metro areas released this morning show the same pattern.

Compared to a year ago, unemployment rates have dropped significantly.  The not-seasonally adjusted data in the table below show declines ranging from 0.8% in Fayetteville and Little Rock to 1.9% in Memphis.  According to this morning’s news release, Arkansas’ metro areas were among the 357 of 372 metro areas nationwide that experienced declining unemployment rates over the past 12 months.

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

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

As was true for the state and national data, monthly changes in the unemployment rate were uncharacteristically large.  According to the smoothed seasonally adjusted data shown below, unemployment rates dropped by as much as 0.4% in Memphis and Pine Bluff.

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

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

But the April declines in unemployment rates are not unambiguously positive news.  As was the case with the state and national data, the changes in metro area unemployment rates were driven by declining labor force participation.  The smoothed-seasonally adjusted data show labor force declines in April ranged from 0.3% in Memphis to 0.8% in Fort Smith.  The concern is that the unemployment rate is not falling because more unemployed are finding jobs, but because more unemployed are becoming discouraged and leaving the labor force (or the state).

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

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

Payroll Employment
The data from the separate survey of employers does little to assuage concerns about the employment statistics from the household survey.  Monthly changes in nonfarm payrolls were mixed around the state:  employment declined in Fort Smith, Memphis and Pine Bluff, but increased in the state’s other metro areas.  Nevertheless, year-over-year gains have generally been modest.  Jonesboro and Fayetteville have seen sizable gains in employment over the past 12 months, but gains in the state’s other metro areas have been relatively small.  Employment in Pine Bluff continues to decline.  Compared to pre-recession employment levels, only Fayetteville and Jonesboro have surpassed previous peaks.

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

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

The April employment statistics represent just one monthly observation.  Recent employment reports have painted a picture of improving labor market conditions–with unemployment falling and labor force participation rising.  The April data broke from these patterns, but it is too soon to say whether this represents a weakening of previous trends or simply a one-month anomaly.

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Arkansas Home Sales – April 2014

By , May 28, 2014 1:43 PM

New data from the Arkansas Realtors® Association shows an increase in Arkansas home sales in April, up 8.2% from the previous year. This year’s increase builds on strong momentum from last year as well:  Comparing April 2014 to April 2012, sales have risen by nearly 25%.  For the first four months of the year, cumulative sales are up 10.2% from 2013 and up 20.4% from 2012.

Source:  Arkansas Realtors® Association

Source: Arkansas Realtors® Association

Among the ten largest counties reported, the strongest year-over-year cumulative sales increases are in Sebastian County (+23.3%) and Benton County (+17.1).   Three counties have seen slight sales declines so far in 2014 — Craighead, Faulkner and Lonoke.   However, when we compare 2014 cumulative sales to two years ago, gains are more widespread.  Eight of the top ten counties have experienced double-digit growth over the past two years, with Benton and Sebastian Counties showing increases of over 36%.

Source:  Arkansas Realtors® Association

Source: Arkansas Realtors® Association

The strong seasonality of home sales implies that the summer months are crucial for annual sales totals.  Upcoming reports for May, June, and July will be important for assessing ongoing momentum in Arkansas’ residential real estate markets.

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Arkansas House Prices – 2014:Q1

By , May 27, 2014 2:41 PM

New data from the Federal Housing Finance Agency shows Arkansas house prices rising, albeit at a slower trend than the rest of the nation.  The most comprehensive of the FHFA’s house price indexes — the Expanded-Data Index — shows that Arkansas house prices rose 1.6% in the first quarter of 2014, slightly higher than the 1.4% pace for the U.S.  Over the past four quarters, however, Arkansas prices have risen a total of only 0.9%, compared to a nationwide rate of 7.0%.  Since the trough in house prices in 2011:Q2, prices in Arkansas have risen by 10%, while the average U.S. increase was 15.5%.

Source:  Federal Housing Finance Agency

Source: Federal Housing Finance Agency

The slower rate of appreciation in Arkansas house prices mirrors a slower rate of depreciation during the house-price collapse of 2007-11.   From 2007:Q1 through 2011:Q2, house prices in Arkansas declined 14%, while average prices for the U.S. declined by over 25%.  In markets where price declines are the largest, the rate of recent appreciation has been the most rapid.  For example, prices in Arizona declined by 46% from 2007 to 2011, and have recovered by 31% since.

The same general pattern is true for metropolitan areas within Arkansas.  The Fayetteville-Springdale-Rogers metropolitan area suffered the largest price declines in the state, dropping by nearly 20% during the period of depreciation (FHFA All-Transactions index).  Since 2011:Q2 prices in Northwest Arkansas are up 8.1%.  Meanwhile, prices in the Little Rock metro area are up only 3.3% from trough, after a net decline of only 1.2% during the nationwide house price decline.

Source: Federal Housing Finance Agency; seasonally adjusted by the Institute for Economic Advancement

Source: Federal Housing Finance Agency; seasonally adjusted by the Institute for Economic Advancement

House prices in Arkansas’ other metro areas have generally changed little over the past several years.  Prices in Pine Bluff, Fort Smith, Jonesboro and Hot Springs continued to appreciate after the nationwide peak in early 2007, but only Texarkana and Jonesboro have seen positive appreciation over the most recent 5-year period.  More recently, prices have been weakening in Jonesboro (down 2.2% over the past year) and in Hot Springs (down 3.5%).

Source:  Federal Housing Finance Agency; seasonally adjusted by the Institute for Economic Advancement.

Source: Federal Housing Finance Agency; seasonally adjusted by the Institute for Economic Advancement.

 

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Arkansas Employment and Unemployment – April 2014

By , May 16, 2014 3:04 PM

The unemployment rate in Arkansas fell three-tenths of one percent in April to 6.6%, the lowest unemployment rate since December 2008.  The relatively sharp decline corresponds to a 0.4% drop in the national unemployment rate in April.  For both the state and the nation, however, the news of a sharp declines in unemployment rates is not unambiguously positive:  the declines took place in the context of sharp drops in the size of the labor force.  For Arkansas, specifically, the number of unemployed declined by over 5,000 but there was no corresponding increase in household employment.  In fact, the number of employed declined by 3,200.  Although the report represents only one month of data, the concern is that the drop in unemployment was caused by discouraged workers leaving the labor force (or the state).

Over a slightly longer term perspective, April represents a set-back relative to the positive trends that have prevailed for the past several months.  Since August 2013, the number of employed is still up by more than 12,800 and the number of unemployed is down by 15, 280.  But these changes imply that the labor force has declined, on net, by over 2,400.

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

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

Payroll Employment
Data from the payroll survey concurred with the household survey’s lack of employment growth:  Nonfarm payroll employment declined slightly in April (-500, seasonally adjusted).  Declines were spread across several service-providing sectors, including a drop of 1,300 in Leisure & Hospitality services.  On the other hand, goods-producing sectors added jobs in April.  Manufacturing and Construction showed gains for the month, and employment in both sectors remain higher than levels of a year ago.

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

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

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*Seasonally adjusted data for Arkansas nonfarm payroll employment, reported in a format compatible with the monthly news release from the Arkansas Department of Workforce Services, can be found hereTable-Seasonally Adjusted NFPE.

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Arkansas Taxable Sales – 2014:Q1 (Preliminary*)

By , May 7, 2014 4:06 PM

Preliminary data on Arkansas sales and use tax collection show that Arkansas Taxable Sales (ATS) increased by 2.1% in the first quarter of 2014 (seasonally adjusted).  The first quarter increase follows two consecutive quarterly declines in the second half of 2013.  Incorporating information on gasoline prices and sales, a broader measure of sales — Arkansas Taxable Sales Including Gasoline (ATSIG) — increased by 2.2%.

On a year over year basis, ATS was up 3.6% and ATSIG was up 2.8%.  From the trough of the recession (2009:Q2) through the most recent quarter, ATS and ATSIG have expanded at average annual rates of 3.2% and 3.7%, respectively.

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

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 2014:Q1(P) (Excel file)

* Data are preliminary until the release of the DFA report, Arkansas Fiscal Notes for April 2014, and will be updated when information becomes available.

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