Arkansas Employment and Unemployment – August 2014

By , September 19, 2014 10:26 AM

The Arkansas unemployment rate ticked up one-tenth of a percent in August to 6.3%.  This was the first increase in the state’s unemployment rate since July of 2013, when the rate increased from 7.6% to 7.7%.  The higher unemployment rate was driven by an increase in the  number of Arkansans unemployed and a decline in the number employed.  The shrinkage of the labor force continued, but it was the smallest decline since a sharp downturn began in April.  Compared to a year ago, the number of unemployed is down by over 20,000 and the unemployment rate is down by 1.4%.  However much of that decline is associated with the contracting labor force, which has fallen by 34,400 since March of this year.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Payroll Employment
Nonfarm payroll employment was essentially unchanged in August (+100 jobs, seasonally adjusted).  Compared to August of 2013, payrolls have increased by 17,600; however, that increase took place almost entirely in the second half of 2013.  Since January of this year, payroll employment has changed little on net (+400).

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Changes in the components of payroll employment were mixed.  Jobs in wholesale trade increased by 1,400 and jobs in Government were down 1,100 — primarily local government employment, which declined by 1,000.  Before seasonal adjustment, local government employment increased by 1,400 due primarily to the start of the school year.  The fact that seasonally-adjusted employment declined shows that the increase in school-related employment was smaller than would typically be expected.

Most sectors were up from a year earlier.  Year-over-year increases in Construction and Manufacturing are particularly encouraging, given the ongoing weakness in those two sectors.  Strong employment gains in Education & Health Services, and in Leisure & Hospitality services are also prominent in the breakdown of job growth.  Three sectors have shown small year-over-year declines:  Information Services, Financial Services, and Government.

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 GDP in 2013

By , September 16, 2014 11:44 AM

New data on GDP growth in metropolitan areas was released this morning by the Bureau of Economic Analysis.  The data show robust growth in Northwest Arkansas, but rather sluggish growth in other parts of the state.  In June, data on real GDP growth by state showed that Arkansas’ economy grew at a rate of 2.4% in 2013, well above the national average of 1.8%.  The metro data show that growth to be concentrated in the Fayetteville-Springdale-Rodgers Metropolitan Statistical Area (MSA), which grew at a 5.6% rate.  Fort Smith and Hot Springs grew slightly faster than the national average for metropolitan areas, while Jonesboro and Little Rock expanded at growth rates of less than one percent.  Memphis, Pine Bluff and Texarkana each showed negative growth from 2012 to 2013.  Out of the total of 381 MSAs in the United States, only Fayetteville, Fort Smith and Hot Springs ranked above the median growth rate.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Although the metro GDP data are based on the best information presently available, the figure for 2013 will be subject to future revision.  As shown in the table, data for 2011 and 2012 were revised substantially since the last metro GDP report a year ago.  Data for Northwest Arkansas were subject to particularly large revisions.  Previously published data had shown growth rates of 0.1% and 0.5% in 2011 and 2012.  The revised data show growth rates of 4.4% and 1.9%.  At the other end of the scale, growth rates for Texarkana were revised downward rather sharply.

The new data also report on GDP per capita, which might be considered a better indicator of economic performance (because it accounts for differences in population growth).  Statewide, GDP per capita in 2013 was $39,111 in 2013 (inflation-adjusted 2009 dollars) — amounting to 79.6% of the national average.  As shown in the chart below, there are some significant differences in GDP per capita among the state’s metro areas.  Little Rock is the only metro area with GDP per capita exceeding the national average in 2013 (102%).  Memphis and Fayetteville stood at 90% and 80% of the national average, respectively.  The lowest per capita GDP was for Hot Springs:  the 2013 figure of $34,918 amounts to only 59 percent of the national average GDP per capita.  Since the recession trough in 2009, real GDP per capita has increased substantially in Fayetteville (+13.8%) and Hot Springs (+12.3%). It has increased more slowly in Fort Smith (+6.0%),  Jonesboro (+4.7%), Pine Bluff (+3.5%) and Memphis (+0.4%).   Little Rock and Texarkana have seen negative growth in real GDP per capita since 2009 (-2.0% and -1.5%, respectively).

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

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Arkansas Taxable Sales – 2014:Q2

By , September 4, 2014 3:46 PM

Newly compiled data on Arkansas Taxable Sales (ATS) suggests a slight slowdown in spending during the second quarter of 2014.   After surging 1.3% in the first quarter, ATS fell 0.3% in the second quarter (seasonally adjusted).  Compared to a year earlier, ATS was up only 0.2%.  A broader measure — Arkansas Taxable Sales Including Gasoline (ATSIG) — was also down 0.3% for the quarter.

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

In the five years since the trough of the recession (2009:Q2), ATS has increased 15.6% and ATSIG has increased by 17.8% — corresponding annual percentage growth rates of 2.9% and 3.3%, respectively.  It is worth noting, however, that the taxable sales statistics are not adjusted for inflation.  Using the price index for personal consumption expenditures, we can express ATS and ATSIG in real (inflation adjusted) terms.  As shown in the figure below, real measures of ATS and ATSIG remain below their previous cyclical peaks.  Since the recession trough, real ATS has increased by only 5.9% (a 1.1% annual rate), while real ATSIG has increased by 7.9% (a 1.5% annual rate).

Sources: Department of Finance and Administration, Oil Price Information Service, U.S. Bureau of Economic Analysis, Institute for Economic Advancement

Sources: Department of Finance and Administration, Oil Price Information Service, U.S. Bureau of Economic Analysis, 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:Q2 (Excel file)

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Arkansas Home Sales – July 2014

By , August 28, 2014 1:47 PM

We received another strong sales report from the Arkansas Realtors® Association (ARA) this morning.  Last week, the ARA revealed a year-over-year sales increase of 10.3% in June.  In July, sales were up 10.8% from the previous year.  Two back-to-back reports of double-digit increases — coming during the peak sales season of the year — represent a clear indication that home sales are on the upswing.  As shown in the chart of not-seasonally adjusted data below, the July 2014 sales total was not only well-above the level of a year ago, but it also surpassed last year’s peak sales month (August).  As a matter of fact, the July sales figure of 2,875 was the highest single-month total since 2007.

Source:  Arkansas Realtors® Association

Source: Arkansas Realtors® Association

The peak sales months of the year are typically June, July and August.  Although their relative ranking can differ from year-to-year, sales during those three months usually account for about 30% of the annual total.  Applying standard seasonal-adjustment methods to the data, the upward trend is apparent:

Source:  Arkansas Realtors® Association; Seasonal adjustment by the Institute for Economic Advancement

Source: Arkansas Realtors® Association; Seasonal adjustment by the Institute for Economic Advancement

Because last year’s peak sales month came in August, it is quite possible that the next report from ARA will not appear quite so strong.  But it has already been a good summer for home sales.

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Metro Area Unemployment and Employment – July 2014

By , August 27, 2014 12:54 PM

Unemployment rates continued to trend downward in most of Arkansas’ metro areas in July.  However, as with the statewide data, unemployment rates are falling against a backdrop of sharp declines in the labor force.

The typical summer spike in unemployment continued to drive month-to-month changes in the not seasonally adjusted data.  Compared to the July 2013, however, unemployment rates were down by more than a full percentage point for all metro areas except Memphis.  The largest year-over-year declines were in Fort Smith, Jonesboro, and Pine Bluff, all showing declines of 1.7 percentage points.

Adjusting for the predictable summer effect, data from the Smoothed Seasonally Adjusted Metropolitan Area Estimates showed unemployment rates generally falling from June to July.  Rates declined by 0.1 percentage pointes in Fayetteville, Hot Springs and Little Rock; and were down 0.2 percentage points in Jonesboro and Pine Bluff.  Rates in Fort Smith and Texarkana held steady, while the rate in Memphis increased by 0.3 percentage points.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

In the context of the statewide unemployment report, we have noted that the number of employed and the civilian labor force has been declining sharply this summer.   Over the past four months, employment has fallen by 21,632 (-1.7%) and the labor force has contracted by 32,374 (-2.4%).  As shown in the table below, the declines are also reflected in most of the state’s metro areas.  The largest percentage declines are in Fort Smith and Hot Springs.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Payroll Employment
Monthly changes in payroll employment were mixed across Arkansas MSAs.  Employment declined in Pine Bluff, Texarkana and Fort Smith.   Small increases were reported in the state’s remaining metro areas.  The declines in Fort Smith and Pine Bluff represent continued weakness:  Employment is down from a year ago in both of those metro areas.  Compared to pre-recession employment levels, Fayetteville and Jonesboro remain the only metro areas in the state that have seen positive net job growth.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

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Arkansas House Prices – 2014:Q2

By , August 26, 2014 4:36 PM

New data from the Federal Housing Finance Agency indicate that house prices in Arkansas increased modestly in the second quarter.  According to the FHFA “Expanded-Data Indexes,” prices of Arkansas homes increased 0.2% from the previous quarter, and were up 1.6% from a year ago.  Prices in Arkansas have been increasing at a significantly slower pace than the nationwide average.  For the U.S., house prices rose 1.3% in the second quarter, and were 6.2% above the levels of 2013:Q2.  Generally speaking, the areas of the country that experienced the largest house-price declines from 2007 through 2011 are the areas where we are seeing the largest price increases today.  On average, house prices did not decline dramatically during the market decline, and so recent price increases have been more muted.

Source:  Federal Housing Finance Agency

Source: Federal Housing Finance Agency

The expanded data indexes are not available for metro areas, but the FHFA does publish “All-Transactions Indexes,” which included data from home sales and refinancing appraisals (but without additional information from county property recorders’ offices).  As shown in the table below, prices have been increasing more slowly than the national average in all of Arkansas’ metro areas.  Compared to a 5.7% year-over-year increase for the U.S., prices have increased only 1.6% statewide.  The largest increases were in Memphis (3.7%) and Fayetteville (2.7%), each of which experienced above-average price declines during the 2007-11 period.  House prices have declined over the past year in Pine Bluff and Texarkana, and have risen only slightly in Hot Springs and Jonesboro.

Source: Federal Housing Finance Agency; Seasonal Adjustment by the Institute for Economic Advancement

Source: Federal Housing Finance Agency; Seasonal Adjustment by the Institute for Economic Advancement

Additional data on metro-area house prices is available from CoreLogic®, a data and analytics company.  In the past 12 months (through June), the CoreLogic house price data confirms home-price weakness in Arkansas.  The statistics from CoreLogic also present the influence of distressed sales (foreclosures and short sales) on home prices.   The FHFA data are based on conforming loans, so do not included distressed sales.  In general, the inclusion of distressed sales continues to put downward pressure on home prices.  An exception is Texarkana, where price declines have been more pronounced in the sample that excludes distressed sales.  One possible interpretation of this pattern is that distressed sales where having an even larger depressing effect on market prices a year ago than they do now.

Source:  CoreLogic®

Source: CoreLogic®

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Arkansas Home Sales – June 2014

By , August 22, 2014 12:32 PM

New data from the Arkansas Realtors® Association (ARA) show continued strength in home sales.  New and existing home sales were up 10.4% compared to June of 2013.  The sales total of 2,708 was the highest total for the month of June since 2007.   For the first half of the year, cumulative sales were up 6.3% from the previous year.

Source:  Arkansas Realtors® Association

Source: Arkansas Realtors® Association

The steadily improving trend in home sales can be seen more clearly when the data are aggregated by calendar-quarter and seasonally adjusted.  As illustrated in the figure below, sales in the second quarter of 2014 were up by more than 3% from the previous quarter, and were nearly as high as the peaks in late 2009 and early 2010 that were associated with Federal home-buyer tax credits.

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

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

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Quarterly GDP

By , August 21, 2014 4:16 PM

The Bureau of Economic Analysis has released yet another “prototype” data set for state-level statistics.  Earlier this month we saw, for the first time, estimates of personal consumption spending by state.  Yesterday, the BEA introduced state-level statistics on quarterly GDP.  For some time, we have had estimates of annual GDP for states, but annual averages can only reveal so much about the short-term ups and downs that characterize an economy.  Access to quarterly estimates provides additional detail for assessing the economy’s dynamics.

The chart below compares quarterly growth rates for U.S. GDP with the new quarterly measure of Arkansas GDP.*  The quarter-to-quarter changes for Arkansas show more volatility than the national average.  This is partly due to statistical measurement issues, but also due to the fact that the U.S. average is naturally smoother as increases in one region tend to offset decreases in others.  Overall, as with other measures of economic activity, Arkansas economy has followed a trajectory similar to the U.S. as a whole.  The data also corroborate some previously established patterns:  Arkansas experienced a sharp recovery from the recession in late 2009 and early 2010, but then fell into a pattern of relatively sluggish growth.   There were even two episodes — late 2010 and mid 2012, where Arkansas experienced two consecutive quarters of negative output growth.  The pace of the expansion picked up in 2013, particularly early in the year.

Source:   Bureau of Economic Analysis*

Source: Bureau of Economic Analysis*

The most recent observations released as a part of the new prototype series were for the fourth quarter of 2013.  In Arkansas, fourth quarter GPD increased at a seasonally adjusted annual rate of 3.0% — slightly higher than the U.S. average of 2.8%.  Among the 50 states, Arkansas growth rate ranked #22.  As shown in the table below, growth was positive in most sectors.  Output in manufacturing — especially non-durable goods — showed particular strength.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

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Note:  Data used to generate historical growth rates use an interpolated estimate for the fourth quarter of 2007.  Payments associated with the purchase of Alltel Communications distort the quarterly personal income statistics which are used to calculate quarterly GDP estimates.  The adjusted GDP data is substituted to smooth out what would otherwise look like an excessive growth/contraction pattern at the end of 2007 and beginning of 2008.

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Arkansas Employment & Unemployment – July 2014

By , August 18, 2014 10:34 AM

The Arkansas unemployment rate was 6.2% in July, down slightly from a revised 6.3% rate in June.  Unemployment rates for Arkansas and the U.S. have once again converged — the national unemployment rate was also 6.2% in July.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Looking in more detail at the components of the unemployment rate, the number of unemployed was down in July for the 11th consecutive month (-626), but it was the smallest decline since last September.  The number of employed continued the sharp downward trend that has prevailed since April.  In July, the number of employed declined by 7,166, bringing the four month cumulative total to -21,632.  With both the number of employed and unemployed falling, the labor force was down by nearly 8,000 in July, and has dropped by over 32,000 over the past four months.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Payroll Data
The survey of employers showed an increase in Arkansas nonfarm payroll employment in July.  Compared to the previous month, employment was up 2,200 (seasonally adjusted).  [The not-seasonally adjusted data highlighted by the Arkansas Department of Workforce Services showed a sharp decline, but all of those losses were attributable to the summer closure of public schools and universities.]  As shown in the table below, several sectors showed small employment declines in July, but these were offset by gains in Retail Trade, Other services and Government.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

The seasonally adjusted data show a year-over-year increase of 15,200 jobs, with gains in every sector except Information Services.  However, most of those increases took place in the second part of 2013.  Total nonfarm payroll employment has declined, on net, by 1,100 jobs since January of this year.  Payroll employment remains 18,700 below the level that prevailed just before the onset of the 2008-09 recession.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

 # # #

*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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Personal Consumption Expenditures

By , August 8, 2014 3:16 PM

The Bureau of Economic Analysis launched a new data program yesterday, Personal Consumption Expenditures by State.   The new data set only covers the period through 2012, but it provides a source of new information about consumer spending at the state level that was unavailable before.

The chart below compares consumption growth rates for Arkansas and the U.S.   The data are not adjusted for inflation, so the growth rates reflect changes in both prices and quantities.  The data show that consumption spending in Arkansas slowed slightly more than the U.S. average during 2008 — the first year of the recession — but did not contract as sharply as U.S. consumption in 2009.  In the subsequent 3 years consumption grew at an average rate of 4.5% in Arkansas compared to 4.2% for the U.S.

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

In the most recent year available, 2012, consumption growth in Arkansas was 3.9%, slightly below the national average of 4.2%.  However, that comparison partly reflects the fact that population growth in Arkansas has been running slightly below the national pace.  In per capita terms, consumption growth in Arkansas was 3.5% in 2012, compared to 3.3% nationwide.

The per capita level of consumer spending in Arkansas in 2012 was $28,366, the second-lowest in the nation and approximately 80% of the U.S. level of $35,498.   This is a function of the relatively low level of income in Arkansas — consumption spending is ultimately constrained by disposable income.   Among categories of expenditure, the BEA press release noted that Arkansas was among the lowest per capita spending rates for housing and utilities, as well as for food and beverages.

The measure of consumer spending that we have relied upon here at the Arkansas Economist up to now, Arkansas Taxable Sales Including Gasoline (ATSIG), showed a sharper decline during 2009 than the new PCE measure, and its recovery has not been as robust in subsequent years.   ATSIG contracted by over 6% in 2009, and its growth averaged only 3.8% from 2010 through 2012.  There are several differences between the two that might help account for the discrepancies.  One difference ATSIG covers only items that are subject to sales tax.  Since many services are not taxable, ATSIG underrepresent the importance of spending on services in a household budget. This doesn’t seem to help explain the difference between ATSIG and PCE, however.   The data on PCE spending on services shows less variability than the goods component.

Three other differences might help explain:  First, Arkansas’ sales taxes apply not only to final consumption expenditures, but to many business-to-business transactions as well.  To the extent that inter-firm transactions have been suppressed by the relatively slow economic recovery, some of the weakness in ATSIG might be separate from trends in consumer spending.   The other two differences have to do with the location of spending.  The taxable sales measure necessarily focuses on spending that takes place in Arkansas, whether it is from Arkansas residents or not, whereas PCE measures spending by Arkansan’s, whether or not the spending takes place in-state.  A related issue is the proliferation of online shopping.  Internet commerce is growing rapidly, and to the extent that many internet purchases by Arkansan’s are not taxed by the seller, the state often does not collect the tax revenue, nor is it recognized in ATSIG.  So it seems likely that the relatively slow growth rate of ATSIG is related to some combination of slow business-to-business spending, lower spending in Arkansas by nonresidents, and more spending by Arkansans to internet vendors and other out-of-state sellers.

 

 

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