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By Michael Pakko, January 18, 2013 11:24 AM

Data from the Bureau of Labor Statistics and Department of Workforce Services show the Arkansas unemployment rate ticked up by one-tenth of a percent in December to 7.1%.  The number of unemployed was essentially unchanged (+223), while the number of employed declined by over 8,700.  After falling by a full percentage point between July 2011 and April 2012, Arkansas’ unemployment rate appears to have plateued over the second half of 2012.  As of December, the rate remains 0.7% lower than the U.S. average.

Source: Bureau of Labor Statistics

The underlying components of the unemployment rate show a clear change in conditions over the second half of 2012.  Although the number of unemployed persons has generally continued to fall, the number of employed has also trended downward.  As a result, the labor force has contracted significantly.  The period from July 2011 to April 2012 was characterized by an expanding labor force and falling unemployment — a very favorable combination of trends.  Since April, however, the decline in the labor force has nearly erased all of the increase that had previously taken place after Arkansas labor markets began to recover at the beginning of 2010.

Source: Bureau of Labor Statistics

Payroll Employment:
Nonfarm payroll employment was also down in December, falling by 3,000 (seasonally adjusted).  Compared to the previous month, employment was down in Manufacturing, Financial Services, Education & Health Services, Leisure & Hospitality Services, and in each of the sub-sectors comprising Trade, Transportation & Utilities.  The only notable increases were in Professional & Business Services, Other Services, and Construction.  In the case of Construction, the not-seasonally-adjusted data actually showed a slight decrease — but it was a smaller decline than would typically be expected in December.  Over the course of the year, total payroll employment rose by 7,700 — a movement in the right direction, but too small to drive any significant progress toward full employment.

Source: Bureau of Labor Statistics

Today’s data release was the last scheduled until March 1st, when we’ll see newly-revised statistics.  Based on the underlying data from the Quarterly Census of Wages and Employment (QCEW), we expect that there will be some significant upward revisions to the Arkansas payroll statistics.  However, the revisions primarily affect the data for late 2011 and early 2012.  Hence, the revised payroll data are expected to be more consistent with the patterns we’ve seen in the data from the household survey — improving conditions up until the spring of 2012, but a stagnant labor market situation since then.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

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By Michael Pakko, January 8, 2013 5:45 PM

New data on employment and unemployment in Arkansas’ metro areas generally show improvements in labor market conditions around the state.  This morning’s data release from the Bureau of Labor Statisics showed that unemployment rates in November were lower than a year ago in all eight of the metro areas that include parts of Arkansas.  The year-over-year declines range from -0.3 percentage points in Jonesboro to -1.4 percentage points in Memphis.

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

The not-seasonally-adjusted unemployment rates were down from the previous month in all metro areas — quite sharply in some cases.  However, recurring seasonal patterns drove a large proportion of the changes.  Even after seasonal adjustment, however, unemployment rates were down for the month in most of Arkansas metro areas.  Data from the BLS smoothed seasonally adjusted estimates showed particularly sharp declines in unemployment for Memphis (-0.4%) and Texarkana (-0.3%).  The seasonally adjusted estimates showed that rates were unchanged in Jonesboro, Little Rock, and Pine Bluff.

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

The chart below shows the path of seasonally-adjusted unemployment rates over the past three years.  Although some metro areas have seen temporary increases from month to month, the trend of lower rates has clearly prevailed since the latter part of 2011.

Source: Bureau of Labor Statistics (Smoothed Seasonally Adjusted Metroplitan Area Estimates)

Payroll Data
Data from the survey of employers told a similarly upbeat story.  From October to November, employment increased in all metro areas except Little Rock. Monthly increases exceeded a full percentage point in Hot Springs, Jonesboro, and Pine Bluff. Compared to the previous November, employment was higher in Fayetteville, Jonesboro, Little Rock, Pine Bluff and Texarkana. Only Fort Smith, Hot Springs, and Memphis showed lower level of employment than a year earlier. The currently-published data show that all of Arkansas’ metro areas except Fort Smith have shown positive growth since the statewide employment trough-date of February 2010.  But only Fayetteville, Jonesboro and Texarkana show employment above pre-recession levels.

Sourse: Bureau of Labor Statistics (Current Employment Statistics)

Expected Data Revisions
The employment data in the table above summarizes currently-published data.  When the payroll data are revised and benchmarked against more reliable data, however, the situation is likely to look quite different.  In previous posts (here for example), we have reported that recent employment data for the state of Arkansas is likely to be revised up by over 13,500 jobs (about 1.2%).  The data revisions for metropolitan areas are subject to greater uncertainty, but the underlying data from the Quarterly Census of Employment and Wages suggest that some of the metro employment figures will be revised substantially.   As shown in the set of charts below, revisions will be particularly significant for Fort Smith, Jonesboro, and Texarkana.  In percentage terms, the largest revision (and arguably the most welcome) is expected to affect data for Fort Smith.  The new data will show that the currently published figures underestimate actual employment in Fort Smith by approximately 5,700 jobs, or 5.2%.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

With these expected revisions, the November employment situation looks somewhat different.  The most recent change (from October to November) will not be affected.  However, the year-over-year, change-since-trough and change-since-peak comparisons will be affected.  The table below summarizes the revised situation (compare to the table above of the same title).

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

Note that these are preliminary estimates calculated by the Institute for Economic Advancement.  The official benchmark revisions will not be published until March 2013.

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By Michael Pakko, December 21, 2012 11:14 AM

New data from the Bureau of Labor Statistics and Department of Workforce Services show the Arkansas unemployment rate fell two-tenths of a percent to 7.0% in November.  The number of unemployed fell by 2,359 to 95,935.  Both the unemployment rate and the number of unemployed were at their lowest levels since January of 2009.  However, household survey also showed that the number of employed persons dropped by 6,305.  Consequently, the labor force contracted by 8,664.  November’s decline represents the sixth consecutive monthly decline in the labor force, and this drop accounts for at least some of the fall in the unemployment rate.

Source: Bureau of Labor Statistics

Payroll Employment
Seasonal factors become particularly relevant this time of year, as colder weather and holiday shopping affect employment patterns in a number of sectors.  The not-seasonally-adjusted statistics for payroll employment showed a decline of 1,100 jobs in November, while the seasonally adjusted statistics showed an increase of 2,000.  For example, construction is one sector where seasonal considerations play an obvious role:  without any seasonal adjustment, the number of construction jobs declined by 1,500.  But the seasonally adjusted figures showed a a slight increase.  Other sectors that experienced largely seasonal declines in November included  Leisure & Hospitality and Professional & Business Services.   On the other hand, employment in the Retail Trade sector was up by 4,000 for the month (not seasonally adjusted), but much of that increase was a typical seasonal phenomenon (seasonally adjusted retail employment was up only 800).   Seasonal movements in employment are certainly of interest in their own right, but seasonally-adjusted figures facilitate comparisons aver time that are better-suited to evaluate business cycle conditions — in this case, progress toward recovering jobs that were lost in the 2008-09 recession.

The table below shows seasonally-adjusted changes in employment over the past month and the past year, as well as comparisons with the previous employment peak (Dec 2007) and trough (Feb 2010).  Month-to-month changes were positive in the good-producing sectors, but were down in many of the service-providing sectors.  Compared to November of the previous year, employment was up in most sectors, but lower in Information, Financial, and Professional & Business services.  Construction employment was also down sharply from the previous year.  Overall, the most recent published data show that employment has increased by 22,100 since the trough of February 2010, but is still down 35,700 from the start of the recession.

Source: Bureau of Labor Statistics

As discussed in recent posts (here, for example) the payroll data for 2011 and early 2012 are expected to be revised upward significantly when the benchmark revisions are released next March.  The expected revisions raise the path of payroll employment significantly — particularly in the fourth quarter of 2011.  For the third and fourth quarters of 2012, the revisions are expected to increase measured employment  by over 13,000 jobs.  As shown in the table below, these revisions paint a much rosier picture of progress toward recovery from the 2008-09 recession.  After the expected revisions, November’s employment figures show a recovery of nearly 36,000 jobs since February of 2010, and a shortfall of only 22,000 jobs compared to the month immediately preceding the recession.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

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By Michael Pakko, December 19, 2012 2:24 PM

Total personal income in Arkansas rose by 1.0% in the third quarter, with a particularly sharp increase in farm income.  According to today’s news release from the Bureau of Economic Analysis (BEA), Arkansas’ third-quarter growth rate was the second-highest in the nation (North Dakota had the highest growth rate).  Data for the first two quarters of the year were also revised upward — from 0.8% to 1.0% in the first quarter and from 1.2% to 1.4% in the second quarter.  Compared to the third quarter of 2011, personal income in Arkansas is up 3.8%.  For the total United States, income growth was 0.4% in the third quarter, and has totaled only 2.4% over the past four quarters.

Source: Bureau of Economic Analysis

Inflation (as measured by the price index for Personal Consumption Expenditures) rose at a rate of 0.4% in the third quarter, up from a 0.2% pace in the second quarter.  Consequently, real personal income in Arkansas rose by only 0.6% in the third quarter, and was up just 2.2% over the past year.  After this inflation-adjustment, Arkansas personal income is now slightly above its previous cyclical peak (by about 1.4%).

Source: Bureau of Economic Analysis

Arkansas was one of several agricultural states for which farm income figured prominently.  For the third quarter alone, farm income was up 19.6%, and accounted for approximately one-third of the state’s income growth.  The BEA report cited two special circumstances affecting agricultural income in the third quarter — both associated with the summer’s drought conditions.  One key factor was net insurance settlements — particularly in the states of the upper Midwest where crop damage from the drought was the most extensive.  In the south, third quarter farm income was also affected by a relatively early harvest season.  (The BEA cited Texas, in particular.)  As noted in previous posts, Arkansas farm output was not as severely affected by the drought due to the high proportion of irrigated farmland in the state, but weather conditions were such that crops were both planted and harvested earlier than usual.

Other than agriculture, earnings growth by industry in Arkansas generally mirrored the national averages.  Sectors with strong earnings growth included durable goods manufacturing, professional services, and health care & social assistance.  Transportation and warehousing fared well in Arkansas, but contributed little to the nation’s income growth.  On the other hand, earnings in the construction industry were weaker in Arkansas than for the nation as a whole (although the BEA report noted that construction income was particularly concentrated in Texas and Oklahoma).

Source: Bureau of Economic Analysis

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By Michael Pakko, December 4, 2012 12:23 PM

Figures released this morning by the Arkansas Department of Finance & Administration show sales tax receipts were up 3.8% in November from a year earlier.  Generally, remissions of sales taxes correspond to sales that took place in the previous month, so the newest information indicate that Arkansas Taxable Sales (ATS) recovered substantially in October.  Sales tax receipts over the past four months have been considerably weaker than expected, falling notably below their trend growth rate.  The latest increase doesn’t replace the revenue shortfall that accumulated in prior months, but it does bring ATS closer to the average growth path that has emerged since the end of the recession.

Sources: Dept. of Finance & Administration, Oil Price Information Service, Institute for Economic Advancement

Average gasoline prices in Arkansas were down slightly in October (falling to $3.50 from $3.65 in September), but a forecast increase in sales volume is expected to boost total spending on gasoline for the month.  As a result, preliminary figures for Arkansas Taxable Sales Including Gasoline (ATSIG) suggest an increase of 4.1% in October compared to the previous year.

Third Quarter Revisions
Complete data are now available for ATS and ATSIG for the third quarter of the year.  The final figures for September were slightly higher than the estimates used to project preliminary data. As a result, third quarter taxable sales were down 2.5%–an improvement from the 3.4% contraction in the preliminary report.  Compared to the previous year, third quarter ATS and ATSIG were both down 0.5%.

Sources: Dept. of Finance & Administration, Oil Price Information Service, Institute for Economic Advancement

There is no obvious explanation for the weak taxable sales in recent months.  But the rebound in October is an encouraging sign as we move into the critical holiday sales season.  Overall, taxable sales in the fourth quarter are expected to be about 3 to 3-1/2% above their 2011 pace.

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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 Data 2012:Q3 (Excel file)

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By Michael Pakko, November 29, 2012 11:40 AM

New data from the Bureau of Labor Statistics shows that October unemployment rates were down from a year ago in 329 of the nation’s 372 metropolitan areas.  All of Arkansas’ metro areas are included in this total.  As shown in the table below, year-over-year changes in unemployment rates (not seasonally adjusted) ranged from -0.3% in Jonesboro to -1.3% in Texarkana.

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

Monthly changes in smoothed seasonally adjusted estimates for October were mixed.   Unemployment rates were unchanged in Fayetteville, Hot Springs, and Little Rock.  Rates ticked up by one tenth of a percent in Fort Smith, Jonesboro, and Memphis.  Pine Bluff’s unemployment rate rose by 0.2% and Texarkana’s declined by 0.2%.  Four of the eight metro areas had unemployment rates lower than the statewide average of 7.2%.

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

Payroll Data
Nonfarm payroll employment in October was unchanged in Fort Smith, Hot Springs and Memphis.  The state’s other metro areas saw fairly sizable increases.  Employment was up 1.0% in Fayetteville and Texarkana, up 1.2% in Little Rock, up 1.4% in Pine Bluff and up 0.8% in Jonesboro.  Each of these increases exceeded the statewide growth rate for the month (0.4%).   Employment was higher than a year earlier in most of the state’s metro areas, with the exceptions of Fort Smith and Hot Springs.

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

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By Michael Pakko, November 28, 2012 12:35 PM

Yesterday’s report on home sales included data showing that average home prices were up 7.8% from October 2011 through October 2012.  On a year-to-date basis, average prices were up 10.4%.  Average sales prices are not necessarily a good measure of overall home values — they sometimes simply reflect changes in the mix of homes that are presently selling.   If higher-price home sales are strong and lower-price home sales are lagging, we would see an increase in the average sales price even if overall home values are unchanged.

In this case, however, the realtors’ sales price data is corroborated by the latest information on home values from the Federal Housing Finance Agency (FHFA).  The FHFA “Purchase-Only Index” for Arkansas shows home prices up 1.6% in the third quarter, and up 7.1% from a year earlier.  For the nation as a whole, home prices were up 2.0% in the third quarter — 3.3% higher than the previous year.  As information accumulates, it is becoming increasingly apparent that home prices have bottomed out and are are now showing at least modest rates of appreciation.

Source: Federal Housing Finance Agency

The FHFA home price indexes are constructed using sales price information from all mortgages processed by FannieMae and FreddieMac.  In order to expand the coverage to include other mortgages, the FHFA has recently introduced an “Expanded Index” that also includes information from county recorder offices.  The latest information from this data series also shows a turnaround in home prices.  In the third quarter, the expanded index data shows prices up 1.2% in Arkansas and up 1.0% for the U.S.  Compared to the third quarter of 2011, prices were up 5.4% in Arkansas and 3.4% nationwide.

Source: Federal Housing Finance Agency

In order to accumulate enough sales-price data to provide reliable indicators for metro-area home prices, the FHFA also constructs a set of “All Transactions” indexes that include information from actual home sales as well as appraisals associated with refinancing.  Recent data for this set of statistics show smaller home price increases — perhaps because appraisers have recently been providing relatively conservative estimates of home values.  Nevertheless, the overall pattern is similar, with prices appearing to have reached a trough, if not yet a clear upturn.

Source: Federal Housing Finance Agency

The all-transactions data shown above also includes price data for the state’s largest metro areas, Little Rock and Fayetteville.  The distinctiveness of local market conditions is evident in this comparison.  Prices in Northwest Arkansas have followed a pattern similar to the national average, while those in Little Rock have shown relatively small changes over time.  As shown in the table below, home prices in the state’s other metro areas have shown differing patterns.  In the third quarter, the all-transactions indexes rose in all metro areas except Little Rock (which was essentially unchanged).  Compared to a year earlier, prices are higher in five metro areas, and are down only for Hot Springs, Little Rock, and Memphis.

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By Michael Pakko, November 27, 2012 12:17 PM

A new report from the Arkansas Realtors Association shows October home sales up 5.9% from the previous year. Home sales typically trend downward during the autumn months of the year, but the pace of the decline can differ from year to year.  As shown in the chart below, sales dropped off sharply from September to October 2011, but dropped only a little from this year’s September sales total.  Hence, today’s report showing a year-over-year increase cannot be viewed in isolation from last month’s report that showed September sales down sharply from the previous year.  Combining this month’s report with last month’s report, sales for the September-October 2012 were down 0.6% from the same period in 2011.

Source: Arkansas Realtors® Association

After removing the pronounced seasonal component of the home sales data, the trend during 2012 has been flat – with sales down just slightly from the previous year.  In fact, today’s report showed that year-to-date home sales were down 2.4% from the 2011 pace.  November and December are usually two of the slower months of the year, so it is unlikely that sales during the remainder of 2012 will have much of an impact on annual totals.  When all the data are in, we continue to expect that 2012 home sales will be down slightly from the previous year.

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

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By Michael Pakko, November 20, 2012 12:22 PM

New data from the Bureau of Labor Statistics and Department of Workforce Services show the Arkansas unemployment rate unchanged in October.  The reported uptick from 7.1% to 7.2% was essentially a rounding error (literally — taken to the next decimal place, the rate changed from 7.14% to 7.16%).  Since April of this year, the Arkansas unemployment rate has been stuck in a range of 7.1% to 7.3%.

Source: Bureau of Labor Statistics

When the unemployment rate was declining in late 2011 and early 2012, total household employment and labor force participation were rising.  Since April, however, both measures have been trending downward with the number of employed falling by 15,700.  Nevertheless, household employment remains over 10,000 higher than a year ago, and is up over 20,000 compared to July 2011.

Source: Bureau of Labor Statistics

Payroll Employment
Today’s report also showed that nonfarm payroll employment increased by 4,400 in October (seasonally adjusted).  Employment in goods-producing sectors was down 1,500 jobs, but service-providing sectors added 5,900 jobs.  Increases were prominent in Wholesale Trade, Retail Trade, and Leisure & Hospitality Services.  Sizable declines were registered in Professional & Business Services (primarily Administrative & Support Services) and in Construction.

Source: Bureau of Labor Statistics

The current data are showing a year-over-year increase in payroll employment of 13,800 jobs, with strong growth in Leisure & Hospitality Services and Education & Health Services.  As discussed in a recent post, however, the payroll data for 2011 and early 2012 are expected to be revised upward significantly.  As shown in the figure below, the expected revisions raise the path of payroll employment growth by over 13,000 by the third quarter of 2012.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

When the revisions are complete, the largest single-month change will be for October 2011–up by 19,000.  With recent monthly observations expected to be revised upward by only 13,600, the revised data will actually show a smaller year-over-year change in employment than currently-published data.  As shown in the table below, the revised data are expected to show a net employment gain of 8,400 from October 2011 through October 2012.  The expected revisions have more significant implications for longer-term measures of employment growth:  The data revisions suggest job growth of 33,800 since February 2010, compared to an increase of 20,200 using currently-published data (see table above).  With recent job gains and expected data revisions, Arkansas is now only 24,000 jobs short of re-attaining the state’s pre-recession level of employment (as of December 2007).

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By Michael Pakko, November 5, 2012 3:08 PM

With the release of the General Revenue Report for October, we now have enough information to calculate preliminary figures for Arkansas Taxable Sales (ATS) for the third quarter of 2012.  The sales tax collection figures dropped fairly sharply in June, and have shown little little sign of growth since then.  As a result, Arkansas Taxable Sales are down 3.4% in the third quarter, following a slight quarterly decline (-0.5%) in the second quarter of the year (seasonally adjusted).  Compared to the same period last year, third-quarter ATS was down 1.0%.

According to data from the Oil Price Information Service, monthly average gasoline prices in Arkansas have varied in a range of $3.22 to $3.74 per gallon so far in 2012.  On a quarterly average basis, however, gasoline prices have shown little movement this year.  Data on gasoline sales from the state’s Motor Fuels Tax section indicate a small increase in the third quarter (+3.3%) following a sharp decline in the second quarter.  As a result, Arkansas Taxable Sales Including Gasoline (ATSIG) was down 2.5% for the quarter, and down 0.9% from the third quarter of 2012.

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

The weakness of sales and use tax collections over the past three to four months has been unexpected, and at least somewhat puzzling.  Other sources of state revenue–notably the individual and corporate income taxes–have been showing robust year-over-year gains.  The second annual sales tax holiday for back-to-school shopping may be partially responsible, but the magnitude of that effect is unlikely to account for the overall weakness in sales tax collections in the third quarter.  Growth in online shopping might also be expected to suppress sales tax collections, but that trend represents a long, gradual process and does not seem to be a likely candidate to explain third quarter growth specifically.  The recent weakness in sales tax collections does coincide with a slowdown in employment growth and unexpected weakness in home sales, but the information is too preliminary to conclude that we’re experiencing a broad-based economic slowdown in the second half of 2012.

At this point, the third quarter data are incomplete.  Final figures on sales and use tax collections are not yet available, nor are the data for gasoline sales in September (the gasoline component of ATSIG in this preliminary report is includes September figures that are derived from model-based estimates).  The data will be updated here on the pages of the Arkansas Economist when final information becomes available.

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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 Data 2012:Q3 (Excel file)

* Data are preliminary until the release of the DFA report, Arkansas Fiscal Notes for October 2012, and will be updated when information becomes available.