Payroll Employment Revisions – Metro Areas

By , March 19, 2014 3:56 PM

The revised payroll statistics that were announced on Monday showed a cumulative downward revision to Arkansas employment that amounted to approximately 11 thousand jobs as of October.  That is, with more accurate source data and refined statistical models, we now know that the previously-published data were overestimating actual employment growth.  These revisions also had an impact on  payroll data for the state’s metropolitan areas.

The table below summarizes the impact of the revisions on metro area employment growth rates in 2012 and 2013.  The revisions affected data from April 2012 through December 2013, resulting in revised growth rates for both of those years.  Because there is considerable month-to-month variation in employment statistics for metro areas, the growth rates in the table are expressed in terms of fourth-quarter over fourth-quarter growth.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

The revision resulted in slower measured employment growth for nearly all of the state’s MSAs in both years.  Two exceptions were Little Rock and Memphis, which saw slight upward revisions for 2012 growth.  Nevertheless, 2013 growth rates were revised downward in each case.   Another exception was Hot Springs, which saw an upward revision in its growth rate in 2013.  In the pre-revision data, only one metro area (Pine Bluff) had negative growth in 2012.  The revised data showed contractions in four of the eight metro areas.

The two figures below illustrate the nature of the revisions for all eight metro areas.  The data are indexed to equal 100 in the fourth quarter of 2007, so the paths shown in the two figures illustrate cumulative employment growth since the beginning of the great recession.  The previously published data showed that Jonesboro, Fayetteville and Little Rock were all in positive territory — that is, they had higher levels of employment in 2013:Q4 than in 2007:Q4.  With the data revisions, Little Rock dropped below the break-even point.  The metro area that suffered the largest qualitative loss was Fort Smith.  Pre-revision data had suggested positive job growth in Fort Smith for most of the past two years.  The revised figures show approximately zero growth over that period.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

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Arkansas Employment and Unemployment – January 2014

By , March 17, 2014 11:57 AM

The first employment report of the new year came out this morning, and the latest data suggest some positive developments.   The headline from this morning’s release from the Department of Workforce Services was that the unemployment rate declined from 7.4% to 7.3%.

As we have noted recently, the annual exercise of data revisions has revealed notable weakness in Arkansas labor markets during 2012 and 2013.  The unemployment rate has been persistently hovering around 7.5% as the national rate declined, and revisions to payroll employment were expected to show that fewer jobs were created last year than initial reports had suggested.  Nevertheless, the newly-revised data also indicate that trends in both household employment and payroll employment have been improving in recent months.

Household Employment
The unemployment statistics are based on a survey of households, with statistical models used to estimate changes in total employment and unemployment.  As we recently reported, the revised data indicate that employment was lower and unemployment higher than initially reported during much of 2012 and 2013.  But the new data also show an improving trend since August 2013.  As shown in the figures below, January was the fifth consecutive month in which employment increased and unemployment declined.   As a result of these improving trends, the unemployment rate dropped from 7.7% in July and August of last year to 7.3% in January 2014.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

While Arkansas’ unemployment rate remained stubbornly high at around 7.5% during 2012 and 2013, the national unemployment rate has been falling.  As a result, the national rate fell below Arkansas’ rate last summer.  We expect the downward trend to continue, for both Arkansas and the U.S., but with Arkansas now lagging somewhat behind.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Payroll Employment
The payroll employment statistics that came out this morning reflected new benchmark revisions for the period April 2012 through December 2013.  As expected, the level of employment in mid-2013 was revised sharply downward — by approximately 11,000 jobs as of October 2013.  Nevertheless, the routine monthly revision of the December statistics and a relatively strong gain in January employment (+4,500, seasonally adjusted) combined to suggest a significant improvement in recent employment trends.  Consistent with the household data, the newly-revised payroll data show five consecutive months  of employment gains, with a cumulative increase of 16,800 jobs since August 2013.

Sources:  Bureau of Labor Statistics, Institute for Economic Advancement

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

The table below shows the breakdown of payroll employment by sector.  The pattern of employment gains in January was somewhat atypical of the post-recession pattern:  Some of the service-providing sectors which have been showing the largest gains since the end of the recession suffered declines in January, while goods-producing sectors showed some unexpected gains.  Particularly noteworthy was the increase in construction employment — up 2,300 on a seasonally adjusted basis.  Overall, nonfarm payroll employment was 12,400 higher in January 2014 than in January 2013.  That represents a cumulative increase of 39,000 jobs since the post-recession trough of February 2010.  Compared to pre-recession employment levels, however, we are still down by 18,000 jobs.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

The revisions to both the household and payroll data show that labor market conditions in Arkansas were worse than we thought during much of 2012 and 2013, but both surveys indicate significantly improving conditions over the past five months.  In the long, slow process of recovery from the recession of 2008-09, we are still lagging behind pre-recession labor market conditions — but recent data indicate emerging favorable trends.

# # #

*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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January Home Sales: A Strong Start to the New Year

By , March 14, 2014 1:43 PM

The Arkansas Realtors® Association announced this morning that home sales in January were up 8.7% from a year ago.  January is typically the slowest sales month of the year, usually accounting for less than 6% of the annual total sales.  Nevertheless, it is encouraging that the new year started out with a solid increase.  Home sales in 2013 overall were up 12.7% compared to 2012, and the new data suggest that the strong growth is continuing into 2014.

Source:  Arkansas Realtors® Association

Source: Arkansas Realtors® Association

Among the 10 counties with the highest sales totals, only two showed decreases compared to last year – Faulkner (-30.9%) and Washington (-8.9).  In both of those counties, however, unusually strong sales in January 2013 biased the year-over-year comparison.  If we compare sales in January 2014 to  January 2012, all 10 counties showed significant increases.

Source: Arkansas Realtors® Association

Source: Arkansas Realtors® Association

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Arkansas Unemployment – Worse Than We Thought

By , March 6, 2014 3:27 PM

The Bureau of Labor Statistics has completed its annual review of state unemployment statistics, with revisions that incorporate new population data and model re-estimation.  For Arkansas, the revised data show that the unemployment rate remained persistently high during 2012 and 2013.  Previously-published data had suggested that the unemployment rate declined to as low as  7.1% at the end of 2012.  The updated data indicate that Arkansas unemployment rate remained stuck at 7.5% through 2012 and into 2013.  The new data also show the unemployment rate rising to 7.7% during the summer months of 2013, before declining to 7.4% in December 2013.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

The figures below show the revisions to the underlying components of the unemployment rate.  In late 2012 and early 2013, reports had suggested that the number of Arkansans unemployed dropped below 96,000.  The revised data indicate that the true number hovered closer to 100,000, before rising to 102,000 in August.  Meanwhile, the number of employed had been persistently overestimated:  The downward revision to household employment averaged more than 9,000 during 2012 and 2013, reaching a peak of nearly 21,000 in December 2012.  The net effect of these revisions was that the size of the Arkansas labor force had been also been persistently overestimated.

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

Source: Bureau of Labor Statistics

The downward revision to the level of household employment had the effect of reducing the magnitude of the measured change in 2013.  Nevertheless, the BLS news release notes that Arkansas had the dubious distinction of having the second-largest decline in the employment-population ratio among the 50 states plus D.C. (-1.0 percentage point).

Household vs. Payroll Employment
The revisions to the household employment data help to explain the puzzling divergence of the BLS’s two independent measures of state employment.  Before the revisions, household employment was showing a contraction of over 36,000 jobs from January 2012 through December 2013.  The revised data suggest that employment never rose as high as previously estimated, so the decline during 2012 and 2013 amounted to only 29,000 employed workers.  This drop-off is still inconsistent with the data from the payroll survey, which shows an employment increase of 16,500 over the two-year period.

We are only days away from the release of revised estimates for payroll employment (March 17).  The new payroll figures are likely to further narrow the gap between household and payroll employment (unfortunately).  Our latest — and final — projection for the downward revision is for a downward shift of 11,400 payroll jobs as of December 2013.*  If accurate, this would indicate that payroll employment expanded by only 5,000 jobs from January 2012 to December 2013.  This still leaves a puzzling gap between the employment estimates from the household and payroll surveys, but the unexplained discrepancy is narrowing as more accurate estimates emerge.

Source:  Bureau of Labor Statistics, Expected Revision Forecast by Institute for Economic Advancement

Source: Bureau of Labor Statistics, Expected Revision Forecast by Institute for Economic Advancement

The latest revisions to the household employment data and the expected revision to the payroll employment data might not fully reconcile the discrepancies between the two series, but they do share a common theme:  As weak as the Arkansas employment situation has appeared in recent months, emerging data suggest that it is even worse than we thought.

____

*The expected revision to payroll employment is forecasted using underlying data from the Bureau of Labor Statistics (Quarterly Census of Employment and Wages) and the Arkansas Department of Workforce Services (Arkansas Covered Employment & Earnings).

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Arkansas Home Prices in 2013

By , February 27, 2014 3:28 PM

Data from the Federal Housing Finance Agency shows that home prices in Arkansas rose modestly during 2013.  From the fourth quarter of 2012 through the fourth quarter of 2013, the FHFA Expanded Data Index shows an appreciation rate of 0.2% (seasonally adjusted).  The comparable rate of appreciation for the entire nation was 7.8%.  All of the gain in Arkansas home prices was attributable to an increase in the first quarter of the  year (+1.3%).  Prices declined 0.9% percent in the fourth quarter, following modest declines in the second and third quarters.

Source:  Federal Housing Finance Agency

Source: Federal Housing Finance Agency

The relatively slow rate of appreciation in Arkansas is not surprising.  During the house price collapse of 2007-2011, prices in Arkansas did not fall nearly as far or as fast as the national average — hence, we are experiencing a smaller bounce-back.

The state-wide average performance of house prices gives a general view of residential real estate prices in Arkansas, but it also masks some differences across regions.  As shown in the table and chart below, house price performance has varied considerably among the state’s metropolitan areas.  The Fayetteville metro area saw the largest increase in house prices over the year (and over the most recent 2-year period) as its market recovered from the steepest price decline in the state during the 2007-11 decline.  House prices in Texarkana were down slightly for the year, but that change represents only a modest setback in an otherwise increasing trend.  Fort Smith and Hot Springs saw the largest 1-year declines, and prices in both of those metro areas are down over the most recent 5-year span.  Nevertheless their cumulative declines since the beginning of 2007 are smaller than either Fayetteville or Memphis.  (In fact, from 2007:Q1 through 2013:Q4, house prices in Fort Smith are down only 0.1%.)  House prices in Memphis declined by over 12% during the 2007-11 downturn, and have yet to show any significant improvement.

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

 

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

Recently released statistics on home prices from CoreLogic®, a data and analytics company, corroborate some of the trends seen in the FHFA data.  For example, the CoreLogic figures show a much slower rate of appreciation in Arkansas than for the national average.  In fact, the full-sample CoreLogic numbers show a decline in Arkansas home prices during 2013.  After netting out distressed sales*, however, home prices were up 3.2% from December 2012 through December 2013.  The CoreLogic statistics also show relative weakness in Fort Smith and Hot Springs — as do the FHFA data.  Net of distressed sales, however, prices in Fort Smith were rising faster than the statewide average.  Increasing prices in Texarkana confirm that the short-term weakness suggested by the FHFA data is likely a data anomaly, and not a sign of a trend reversal.

Source:  CoreLogic®

Source: CoreLogic®

____

* Distressed sales include properties that have been through foreclosure and those that are exchanged in “short-sales” (in lieu of foreclosure).

 

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Arkansas Taxable Sales – 2013:Q4 (Preliminary*)

By , February 11, 2014 2:30 PM

Preliminary data on Arkansas Taxable Sales (ATS) show a slight decline in the fourth quarter of 2013 — down 0.2% from the previous quarter (seasonally adjusted).  The fourth quarter decline followed a 0.7% contraction in the third quarter.   Expenditures on gasoline fell by 7.5% in the fourth quarter, primarily as a result of lower prices.  Accordingly, Arkansas Taxable Sales Including Gasoline (ATSIG) declined by 0.5% compared to the previous quarter.  Over the four quarters from 2012:Q4 to 2013:Q4, the net increase in ATS was 2.1%.  Including gasoline, the year-over-year gain was only 1.1%.

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

For the year as a whole, ATSIG was 2.5% higher than the previous year — matching the rate of increase from 2011-2012.  Following a 7.4% decline during the recession year of 2009, taxable sales had shown a rebound of 5.2% in 2010.   The slower growth in subsequent three years has barely exceeded the rate of CPI inflation.  (Annual CPI increases were 3.1% in 2011, 2.1% in 2012, and 1.5% in 2013.)

ATSIG-2013

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

 # # #

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:Q4(P) (Excel file)

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

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Metro Area Employment and Unemployment – December 2013

By , February 6, 2014 2:52 PM

Yesterday’s news release from the Bureau of Labor Statistics summarized unemployment in the nation’s metropolitan areas as follows:  “Unemployment rates were lower in December than a year earlier in 339 of the 372 metropolitan areas, higher in 25 areas, and unchanged in 8 areas.”  In Arkansas, the counts were far less favorable.  Compared to December 2012, unemployment rates were lower in only half of Arkansas’ metro areas — and by fairly small magnitudes.  Unemployment rates were up in three metro areas, and up sharply in Pine Bluff and Texarkana.  The rate in Little Rock was unchanged.

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

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

Smoothed seasonally adjusted estimates show that the most recent month-to-month changes were more favorable.  From November to December, unemployment rates declined in four of the state’s metro areas, were unchanged three, and ticked up by 0.1% in Fort Smith.

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

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

Over time, the smoothed seasonally adjusted estimates show that progress toward lower unemployment stalled, at best (e.g. Fayetteville, Jonesboro, Little Rock) and has reversed in other areas (Pine Bluff, Memphis, Hot Springs, Texarkana).  Overall, the state’s unemployment rate has been stuck in the range of 7% to 7.5% for the past two years.

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

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

Payroll Data
The latest data from the payroll survey show similarly stagnant trends — at least for most of the state’s metro areas.  From November to December, payroll employment declined in Fort Smith, Jonesboro, and Texarkana.  Hot Springs showed a strong month-to-month increase, but was down 0.8% from the previous year.  Pine Bluff and Texarkana also showed year-over-year declines.

Source:  Bureau of Labor Statistics, Current Employment Statistics

Source: Bureau of Labor Statistics, Current Employment Statistics

Since the onset of the 2008-09 recession, 3 of the state’s 8 metro areas have recovered to the point of having positive net job growth:  Jonesboro, Fayetteville, and Little Rock.  The remaining Arkansas metro areas (along with the statewide total) remain below employment levels of December 2007.  The chart below shows that patterns of employment growth around the state have been varied.  While Fayetteville, Jonesboro and Little Rock have followed consistent recovery paths since the end of the recession, other areas have recovered more recently (e.g.  Fort Smith, Hot Springs, Memphis).  After an initial recovery phase, employment in Texarkana has been declining since early 2011.  Pine Bluff has been on a downtrend throughout the recession and recovery periods.

Source:  Bureau of Labor Statistics, Current Employment Statistics

Source: Bureau of Labor Statistics, Current Employment Statistics

Household/Payroll Divergence
We have noted that the payroll and household surveys have been providing conflicting signals for statewide employment.  This is also true at the metro-level.  The following chart shows that the household measure of employment has been consistently under-reporting employment growth relative to the payroll measure.  Although the magnitudes of the growth rates differ, both surveys show the similar relative performances among the state’s metro areas.  Upcoming revisions (particularly to the payroll figures) might help reconcile the discrepancies between the two measures of employment.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

 

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Arkansas Home Sales – December 2013

By , January 29, 2014 3:48 PM

Arkansas home sales ended the year on a strong note, with December sales up 17.6% from the previous year.  The year-end data from the Arkansas Realtors® Association confirmed that the slight dip recorded in November was an aberration – likely associated with the fact that the Thanksgiving holiday fell at the end of the month.  For November and December combined, sales were up 6.8% from the previous year.  The total for December was the highest recorded for that month since 2006.

ARA_1213_NSA

Source: Arkansas Realtors® Association

Annual totals from the Realtors’ data showed that sales were up 12.7% for the year.  In fact, this figure probably understates the true growth rate.  It is not uncommon for late-reported sales to result in upward revisions to the total figures, so the numbers for November and December are likely to be even higher when all the data are in.  As shown in the figure below, seasonally-adjusted sales showed a significant surge in 2013, representing a long-awaited recovery from the lackluster pace of 2011 and 2012.

Source: Arkansas Realtors® Association, seasonally adjusted by the Institute for Economic Advancement

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

Some of the rapid growth in home sales during 2013 was associated with demand overhang from the previous two years.  As a result, sales growth in 2014 is likely to be slightly lower.  Nevertheless, statewide home sales are still well below their pre-recession pace, so there is plenty of room for expansion.  In addition, historically low home mortgage rates should continue to foster a favorable environment for prospective home buyers.  The Arkansas Economist’s forecast for home sales in 2014 (from the November Forecast Conference) is for an increase of 7.2% compared to 2013.

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Arkansas Employment and Unemployment – December 2013

By , January 28, 2014 7:12 PM

The unemployment rate in Arkansas fell by 0.1% in December to 7.4%.  Although the decline was smaller than the 0.3% decline in the national unemployment rate in December, it represented movement in the right direction. Over the past two years, the national unemployment rate has fallen by about 1.5 percentage points, while the Arkansas rate has been stuck in the range of 7% to 7.5%.  During the recession of 2008-09 and for much of the subsequent recovery, Arkansas’ unemployment rate was significantly lower than the U.S. average.  However, recent data show that the rest of the nation has overtaken Arkansas in terms of progress toward lower unemployment.

URATES-AR&US-1213

Source: Bureau of Labor Statistics

Today’s report showed that the number of employed Arkansans increased by approximately 3,200 in December, and that the number of unemployed declined by 600.  This represents the second consecutive month that the household survey has shown higher employment and lower unemployment.  As shown in the set of charts below, these changes represent a welcome change from trends in recent months.

AR-LAUS-Dec2013

Source: Bureau of Labor Statistics

Payroll Survey
The payroll survey showed a net decline of approximately 900 jobs in Dececember.   Construction employment was down for the month, although it remained 1,400 higher than in December 2012.  Manufacturing employment showed no net change for the month.  More surprising was the weakness in service-providing sectors: Some of the sectors that have been strong performers in recent months showed net employment declines in December, including Professional and Business Services (-1,100), Education and Health Services (-100) and Leisure and Hospitality Services (-300).  On the other hand, increases were reported for both the Wholesale and Retail Trade sectors.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Overall, the payroll data show a net employent increase of 12,600 jobs since December 2012.  But over the same period, the household survey has shown a net decline in employment of over 22,000. This was the final report for 2013, but the data are subject to subsequent revision.  In late February the BLS will release updated estimates of household employment and unemployment, then in mid-March, the annual “benchmark revisions” for nonfarm payroll employment will be released.  As noted in previous posts, the payroll data are likely to be revised downward, but it appears unlikely that the downward revision to payroll employment estimates will be enough to bring the two surveys back into alignment.  At this point, it remains an open question as to which survey is providing more accurate readings on the state of Arkansas labor markets.  Given current data, however, neither survey is suggesting a particularly strong performance.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics, Institute for Economic Advancement

 # # #

*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 Employment and Unemployment – November 2013

By , January 10, 2014 12:08 PM

Data on metro area unemployment rates that came out earlier this week indicated that Arkansas metro areas are generally not following the improving trend seen in the nationwide data.  The news release from the Bureau of Labor Statistics noted that November unemployment rates were lower than a year earlier in 293 of the nation’s 372 metropolitan areas.  In Arkansas, only Fort Smith was included in this count.  As shown in the table below, year-over-year unemployment rate increases ranged from +0.1% in Fayetteville and Jonesboro to +1.1% in Pine Bluff.  The rate was down 0.4% in Fort Smith.

MSA-URATES-1113-NSA

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

Smoothed seasonally adjusted estimates for unemployment showed monthly increases in Hot Springs, Little Rock, Memphis, and Texarkana. The unemployment rate in Fort Smith was down 0.1% from the previous month.  For the remaining metro areas (and the statewide average), unemployment was unchanged from October to November.

MSA-URATES-1113-SSA

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

Payroll employment data for Arkansas metro areas were mixed.  Although statewide employment increased by 3,000 (+0.3%) in November, three of the state’s metro areas showed monthly declines (Fort Smith, Jonesboro, and Texarkana) and employment in Pine Bluff was unchanged.  The four remaining metro areas saw increases ranging from 0.2% in Little Rock to 0.8% in Hot Springs.  Compared to a year ago, payroll employment is down Hot Springs, Pine Bluff and Texarkana, but has increased in the remaining metro areas.

MSA-NFPE-1113

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

Since the employment trough of February 2010, most of the state’s metro areas have shown net employment increases.  However, employment in Texarkana seen a recent decline that erased earlier gains and employment in Pine Bluff has continued a downward trend that began well before the 2008-09 recession.  Compared to the pre-recession peak, only three metro areas have shown net increases:  Jonesboro, Fayetteville, and Little Rock.

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