Arkansas Economic Development Institute

Metro Area Employment and Unemployment – May 2017

By , June 28, 2017 4:05 PM

In its latest news release on metro area employment and unemployment, the Bureau of Labor Statistics noted that unemployment rates “were lower in May than a year earlier in 298 of the 388 metropolitan areas.”  Seven of the eight metro areas including parts of Arkansas fell into this category, with Texarkana being one of the nation’s 66 metro areas to have higher unemployment than a year earlier.

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

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

Seasonally adjusted estimates showed unemployment rates were generally unchanged or ticked downward in May, with the exceptions being Fort Smith and Memphis.  In Fort Smith, the rate ticked upward by 0.1 percentage point, while in Memphis the unemployment rate plummeted by 0.6 percentage points.

Source Bureau of Labor Statistics, Seasonally Adjusted Metropolitan Area Estimates

Source Bureau of Labor Statistics, Seasonally Adjusted Metropolitan Area Estimates

The sharp decline in Memphis’ unemployment rate wasn’t associated with a commensurate increase in employment.  Rather, the data show a 13.5% decline in the number of unemployed, along with a decline in the number employed.  The reason for this sudden drop in labor force participation is not clear.

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

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

Payroll Employment
Nonfarm payroll employment increased in five metro areas in May, declining in the other three.  Pine Bluff saw a one-month increase in employment of 1.2%, bringing the total back up to the same level as a year ago.  Little Rock’s employment ticked down 0.1% in May, and is little changed from a year ago.  The fastest-growing employment markets in the state continue to in the Northwest and Northeast corners of the state.  Employment in the Fayetteville MSA was up 0.8% in May, and is 4.3% higher than a year ago.  In Jonesboro the one-month increase was 0.2%, corresponding to a 2% increase from May 2016.  These two metro areas remain the only parts of Arkansas in which employment is significantly higher today than before the 2008-09 recession.

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

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

Arkansas Personal Income – 2017:Q1

By , June 27, 2017 3:55 PM

Arkansas personal income increased by 1.0% in the first quarter of 2017, the same pace as the national average.  The range of growth rates among states ranged from -0.1% in Nebraska (the only state with negative growth) to +1.6% in Idaho.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

From the first quarter of 2016 to the first quarter of 2017, personal income in Arkansas increased 3.1%, compared to a 3.7% growth rate nationwide.  From the recession trough-date of 2010:Q1, income growth has averaged 4.0% in Arkansas and 4.2% for the U.S.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

As shown in the table below, Arkansas farm income rose sharply in the first quarter.  The news release from the Bureau of Economic Analysis indicated that farm earnings was a leading contributor to growth in Idaho, the fastest growing state in the first quarter, but was also a leading contributor to slow growth in other states.  The divergence in the contribution of farm income to growth reflected different types of farm output among states.  Proprietors’ income also increased sharply in Arkansas in the first quarter, although the growth rate of that category has been slightly lower than the national average over the past four quarters.  Although personal current transfer receipts expanded at a rate of only 1.0%, compared to 1.5% nationwide, that category represents the only major component of personal income to outpace the U.S. average over the most recent four quarters.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Earnings by place of work, which comprises about two-thirds of personal income, increased 1.23% in Arkansas in the first quarter, slightly outpacing the U.S. growth rate of 1.07%.  For the most part, sectors seeing a decline in income in Arkansas were also slow-growth sectors nationally–these included forestry and fishing, transportation and warehousing, information, and management of companies and enterprises.  In addition to farm income, the fastest growing industry groups included mining, construction, real estate, educational services, and administrative and waste management services.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Regional Price Parities and Real Personal Income – 2015

By , June 23, 2017 10:07 AM

Arkansas is a relatively low income state, but it is also a state with a very low cost of living.  A dollar of income supports more real spending in Arkansas than it would in other, more expensive parts of the country.  New data from the Bureau of Economic Analysis documents the low cost of living in Arkansas using measures known as Regional Price Parities (RPPs).

RPPs measure the average price of goods and services in a geographic region compared to other regions in the U.S.  The figure below displays these measures for the 50 states and the District of Columbia, as of 2015.  The most expensive state in the nation is Hawaii, with prices that are 18.8% above the national average.  At the other extreme, the cost of living is only 86.2% of the national average in Mississippi, almost 14% below average.  Arkansas comes in at #3 on the list of states with the lowest cost of living, with a RPP of 87.4.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

While the cost of living is lower in all areas of the state, there are differences among the RPPs for regions within Arkansas.  As shown in the following table, the cost of living is highest in the Northwest and Central Arkansas metropolitan areas.  Nonmetropolitan areas of the state have a RPP of 83.9, implying a cost of living that is 16% below the U.S. average.  Among metro areas, Jonesboro is the least-expensive place to live.  In fact, Jonesboro’s RPP ranks it with the 7th lowest cost of living among all 382 of the nation’s metropolitan statistical areas.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The table also shows that differences in rents–or housing costs more generally–drive the overall differences in cost of living.  Goods prices tend to vary relatively little in different parts of the country.  The cost of services, which have a significant locally-produced content, vary more substantially.  Rents, on the other hand, are entirely local prices and therefore display the largest region-specific component.

Real Income and Local Inflation
By adjusting incomes in states and regions for differences in cost of living, RPPs can be used to calculate measures of purchasing power that provide real (price-adjusted) measures of income.  Typically the term “real income” is used to describe measures that are adjusted for inflation, or price differences over time.  In the context of RPPs, the adjustment covers differences over both time and space.

In the latest data, for instance, the RPP for Arkansas rose from 87.1 in 2014 to 87.4 in 2015.  Because the RPP for the entire U.S. is 100, by definition, this means that prices in Arkansas rose by 0.3 percentage points more than for the nation as a whole.  U.S. inflation was 0.3% in 2015 (as measured by the implicit price deflator for personal consumption expenditures) so Arkansas’ inflation rate was about double the national average for that year.  Actually after rounding to the nearest one-tenth of a percentage point, the inflation rate implied by Arkansas regional price deflator was 0.7%.  Other states’ regional price adjustments indicated inflation rates ranging from 1.2% in North Dakota to -0.7% in Delaware.

The figure below illustrates the varying path of price-level changes in Arkansas compared to the national average.  The U.S. the data are annual percent changes in the implicit price deflator for personal consumption expenditures.  For Arkansas, the data represent implicit price deflators based on the annual RPP statistics.  The two measures of “inflation” track fairly closely over time.  Over the five-year period, cumulative compounded price changes totaled 9.5% for the U.S. and 10.6% for Arkansas, implying that the cost of living in Arkansas was rising slightly toward the national average, on net.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The following table shows the growth rates of total personal income and real personal income in Arkansas, adjusted for differences in inflation and regional prices.  The table decomposes total income growth from 2014-15 into real and inflation components (the percent growth columns).  For Arkansas statewide, nominal (dollar) income rose 2.2%, with 1.4% attributable to real income growth and 0.7% to overall price increases (with the remainder due to rounding error).  The highest real income growth rate in the state was in the Fayetteville metro area, with 3.7% nominal income growth and 0% inflation.  Nominal income in Pine bluff increased only 0.1% in 2015 but prices declined by 0.5%, resulting in an increase in real income of 0.6%.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Real Per Capita Income
One commonly used measure of local economic well-being is per-capita personal income.  In dollar terms, per capita income in Arkansas was $38,257 in 2015, which amounted to just under 80% of the national average.  When we take into account the higher purchasing power of incomes in Arkansas, real per capita income is over 91% of the national average.  The table below shows how the adjustment for purchasing power changes the relative standards of living implied by per capita incomes in Arkansas’ metro areas.  The accompanying figure illustrates the differences among areas.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The highest per capita income in the state is in the Northwest Arkansas metro area.  In dollar terms, per capita income is 9% above the national average. After taking account of the fact that the cost of living is over 10% below the national average, per capita income in the Fayetteville metro area is 22% above the national average–in terms of purchasing power and standards of living.  The very low cost of living in Jonesboro has a particularly large impact on this real income comparison.  In dollar terms, per capita income in Jonesboro is only 70% of the U.S. average, but after adjusting for prices it amounts to 86%.

Arkansas Employment and Unemployment – May 2017

By , June 16, 2017 11:02 AM

Arkansas’ unemployment rate declined another tenth of a percent in May, setting a new series record low of 3.4%. With the U.S. rate tracking downward at the same pace, Arkansas’ unemployment rate remains nearly a full percentage point below the national average.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Underlying data from the household survey has been showing very strong employment growth during 2017, particularly over the past two months. The number of employed was up 8,604 in May after increasing 7,887 (revised) in April. These recent increases are reminiscent of early 2016, when household employment increased by an average of 10,000 per month for three months.  At the time, we were skeptical of the magnitude of those increases, and subsequent data revisions eliminated that brief surge from the record. With those large gains revised away, the increases from the past two months are far and away the largest monthly increases in the series’ history. The data clearly suggest that the number of employed is rising, but the magnitude of the gains over the past two months are eventually likely to look considerably smaller than the recently-released data suggest, once the final revisions are compete.

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

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

Payroll Employment
Nonfarm payroll employment increased 2,900 in May (seasonally adjusted) and is up 22,000 compared to a year earlier. Goods-producing sectors were little changed, on net, with manufacturing down by 1,000 and construction up by 800.  Employment gains in the service-providing sectors were concentrated in the rapidly-growing sectors of Professional & Business Services and Leisure & Hospitality Services. Health Services were down slightly in May, but employment in that sector is still up 4,800 from May 2016.

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

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

Over the past 12 months, the growth rate of Arkansas nonfarm payroll employment has been 1.8%, compared to 1.6% for the U.S.  Arkansas total payroll employment is now 3.3% higher than its level just before the 2007-08 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.

Metro Area Employment and Unemployment – April 2017

By , June 1, 2017 4:57 PM

Unemployment rates in Arkansas metro area continued their downward trend in April.  The Bureau of Labor Statistics reported yesterday that unemployment rates were lower than a year earlier in 322 of the nation’s 388 metropolitan areas.  Seven of Arkansas’ eight metro areas were included in this number.  In Texarkana, where the rate has been drifting upward  over the past twelve months, the unemployment rate was up 0.5% compared to last April.

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

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

On a seasonally adjusted basis, unemployment rates ticked downward in all Arkansas metro areas except Fort Smith, where it was unchanged.

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

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

The time series of seasonally adjusted unemployment rates shows convergence to three different levels cross the state.  Texarkana, Memphis and Pine Bluff are clustered around 5%, Fort Smith and Hot Springs are at or near 4.0%, and Little Rock, Jonesboro and Fayetteville are at 3% or lower.

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

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

Payroll Employment
Changes in nonfarm payroll employment were mixed around the state.  Only Jonesboro and Hot Springs showed increases from March to April, while Fayetteville, Fort Smith, Little Rock, Pine Bluff and Texarkana experienced employment declines.  Memphis was unchanged.  Compared to a year earlier, employment has declined in Fort Smith, Pine Bluff and Texarkana.  Fayetteville Jonesboro, Hot Springs and Memphis are up significantly, while Little Rock employment is essentially unchanged.

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

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

Compared to employment levels before the 2008-09 recession, employment statewide has expanded by 3.0%.  But that aggregate masks some huge differences among metro areas and regions.  Employment levels in Fayetteville and Jonesboro are up 21.1% and 15.9%, respectively, while payrolls in Pine Bluff are down 13.8%.

Arkansas House Prices – 2017:Q2

By , May 24, 2017 5:40 PM

Arkansas house prices continue to trend upward, but at a slower pace than the national average.  According to the latest Expanded Data indexes from the Federal Housing Finance agency, Arkansas house prices rose 1.2% in the first quarter of 2017.  Over the most recent four quarters, Arkansas house prices were up 4.2%.  Over the same period, the national average for house prices increase by 6.7%

Source: Federal Housing Finance Agency

Source: Federal Housing Finance Agency (FHFA)

The comparatively rapid pace of house prices nationwide reflects a rebound effects in the areas where prices declined the most during the market crash of 2007-11.  As shown in the following figure, that pattern holds true for the metro areas that cover parts of Arkansas.  House prices declined by over 12% in Memphis and by nearly 20% in Fayetteville from 2007 to 2011.  Those two metro areas have also seen the most rapid home-price appreciation since 2012.  Having experienced little depreciation during the period of housing price declines, Jonesboro and Texarkana have seen the highest rates of cumulative price increase since 2007.

Source: Federal Housing Finance Agency (FHFA).  Seasonal Adjustment by the Institute for Economic Advanacement

Source: Federal Housing Finance Agency (FHFA). Seasonal Adjustment by the Institute for Economic Advancement

In the most recent quarter, house prices were up in all of Arkansas’ metro areas except Little Rock, where prices are reported to have fallen by 1.0%.  Prices were down over the quarter in non-metropolitan regions of he state.  Over the past year, prices have risen most rapidly in Fort Smith and Fayetteville, and have risen most slowly in Pine Bluff and Little Rock.

Federal Housing Finance Agency (FHFA). Seasonal Adjustment by the Institute for Economic Advancement

Federal Housing Finance Agency (FHFA). Seasonal Adjustment by the Institute for Economic Advancement

Arkansas Employment and Unemployment – April 2017

By , May 19, 2017 4:47 PM

In the latest data on state employment and unemployment, the Bureau of Labor Statistics reports that the unemployment rate in Arkansas dropped by 0.1 percentage points to 3.5%, down from 3.6% in March.  Coming off of what was a record low unemployment last month, the latest unemployment rate sets a new all-time record low.  The U.S. unemployment rate also declined by 0.1 percentage points in April, declining to 4.4%.

Source: Bureau of Labor Statistics

Source: Bureau of Labor Statistics

The number of unemployed declined by 911 and the number of employed increased by 7,693 in April.  The number of employed Arkansans had been slowly declining through most of 2016, but has been increasing for the first four months of 2017.  The labor force has also been expanding since January.

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

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

Payroll Employment
Nonfarm payroll employment was up 3,100 in April (seasonally adjusted).  Goods producing sectors added 1,200 jobs, with welcome increases in both Manufacturing and Construction.  Employment in service-providing sectors was up 1,900, with the largest gains coming in the Leisure and Hospitality Services.  Substantial increases were also reported in Transportation & Utilities, Professional & Business Services, and Education & Health Services.

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

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

Compared to April of 2016, payroll employment is up 17,900, a gain of approximately 1.5%.

# # #

 *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.

Arkansas GDP – 2016:Q4

By , May 11, 2017 4:59 PM

New data on state-level GDP was published this morning by the Bureau of Economic Analysis.  In the fourth quarter, Arkansas GDP  expanded at an annual rate of 0.5%, well below the nationwide average of 1.9%.  Arkansas growth rate ranked #45 of the 50 states.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

First-published estimates of GDP are based on incomplete data and are subject to significant future revision as more information becomes available, so the relatively low growth rate in the second quarter should not necessarily be cause for alarm.  However, today’s release also included revisions to data for 2013 to-date.  For Arkansas the revisions were negative and substantial:  The cumulative revision to the level of real GDP in 2016:Q3 amounted to 2.1%.  The newly revised data show recent growth rates of GDP to be in the range of less than 1%, compared to the 2%-3% range indicated by previously published data for 2016.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Annual Data
Today’s report also represents the first estimate of the state’s GDP for 2016 as a whole.  On an annual basis, the growth rate for Arkansas’ GDP was 0.8%, compared to 1.5% for the U.S.   Arkansas’ growth rate has fallen short of U.S. growth since 2013, with the gap particularly wide in 2015 (0.2% vs. 2.6%).

Source:  Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Growth by Sector
The table below details growth by sector for Arkansas and the U.S.  The relative weakness of Arkansas’ growth is clearly concentrated in goods-producing sectors.  Low energy prices have depressed mining activity both nationwide and in Arkansas.  Durable goods manufacturing growth has been positive nationwide, but manufacturing growth for both durables and nondurables has been negative here in Arkansas.   Construction activity has also been relatively weak in Arkansas.

Service providing sectors in Arkansas have performed better, in both absolute and relative terms.  Although the one-quarter growth rates in Arkansas for 2016:Q4 are generally below national averages, year-over-year measures of service sector growth compare more favorably to national growth rates.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

 

Arkansas Taxable Sales – 2017:Q1

By , May 10, 2017 4:14 PM

Arkansas Taxable Sales (ATS) rose 0.1% in the first quarter of 2017 — up 2.1% from a year earlier.  From the end of the recession in 2009:Q2 through the first quarter of 2017, ATS has expanded at an annual rate of 2.9%.

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

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

Gasoline prices averaged $2.11 during the first quarter, up from $2.00 in the fourth quarter of 2016.  As a result, expenditures on gasoline were up 8.0% in the first quarter and were 27.7% higher than in the first quarter of 2016.  Incorporating this source of increased spending, Arkansas Taxable Sales Including Gasoline (ATSIG) increased by 0.5% in the first quarter of 2017, and were 3.3% higher than a year earlier.

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

Sources: Arkansas 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 monthly and quarterly data is available here: Arkansas Taxable Sales 2016:Q4 (Excel file).

Metro Area Employment and Unemployment – March 2017

By , May 3, 2017 5:06 PM

New data on unemployment in Arkansas metro areas shows rates generally continuing to trend downward in March.  The exceptions were Pine Bluff and Texarkana, each of which had unemployment rates that were unchanged from February.  Elsewhere in the state, unemployment rates ticked downward by 0.1 or 0.2 percentage points.

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

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

Compared to twelve months earlier, rates are down approximately one-half of a percentage point in most of the state’s metro areas.  Unemployment in Memphis is the same as it was a year ago.  In Texarkana, the unemployment rate was on the decline through early 2016, but has edged up by one-half of a percentage point since March of 2016.  The figure below shows current rates and recent trends for unemployment rates in metro areas around the state.

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

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

Payroll Employment
Statewide nonfarm payroll employment was essentially unchanged in March.  Monthly changes in the state’s metro areas were mixed.  Fort Smith and Jonesboro both saw declines of over 1 percent.  Employment in other metro areas was up slightly.  Over the past year, Pine Bluff, Texarkana and Fort Smith have seen zero or negative employment growth, while the other MSAs have seen employment expand.  The Fayetteville metro area continues to exhibit the strongest growth in the state.

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

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

Over the longer run, employment growth trends have diverged significantly during the current economic expansion.  Fayetteville and Jonesboro have grown steadily since the end of the great recession, but other metro areas have experienced slower growth.  Among the state’s other metro areas, only Little Rock and (as of this month) Memphis have surpassed pre-recession employment levels.

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

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

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