Arkansas Economic Development Institute

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Arkansas Taxable Sales – 2017:Q2

By , August 16, 2017 1:04 PM

The growth rate of Arkansas Taxable Sales (ATS) surged in the second quarter of 2017, increasing by 2.2% (an 8.9% annual rate).  From the second quarter of 2006, ATS has increased by 4.8%.  Although gasoline prices were unchanged from the first quarter to the second quarter, seasonally adjusted gasoline sales were down by 10%.  Accordingly, Arkansas Taxable Sales Including Gasoline (ATSIG) increased at a lower rate than ATS, rising 1.5% for the quarter.

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

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

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

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

Since the end of the 2008-09 recession, ATS and ATSIG have grown at average rates of 3.1% and 2.9%, respectively.  Over the same period, however, inflation has averaged about 1.5%.  Hence, only about half of the expansion in taxable sales over the past 8 years can be attributable to real (inflation-adjusted) growth.

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Arkansas Taxable Sales (ATS) is calculated by the Arkansas Economic Development Institute 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 2017:Q2 (Excel file).

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Arkansas GDP – 2017:Q1

By , July 26, 2017 5:02 PM

Arkansas GDP increased at a 1.3% annual rate in the first quarter, slightly higher than the nationwide average of 1.2%.  Arkansas’ growth rate ranked #23 among the 50 states.  The Bureau of Economic Analysis reported that GDP growth was positive in 43 states and the District of Columbia.  Growth rates ranged from a high of 3.9% in Texas to a low of -4.0% in Nebraska.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

Although Arkansas growth rate in the first quarter was above the national rate, GDP growth had been running below the national average in the second half of 2016.  As a result, the latest reading on year-over-year growth shows Arkansas up only 0.3% compared to 2016:Q1, with U.S. GDP up 1.9% over the same period.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

In its news release, the Bureau of Economic Analysis reported that the nation’s growth rate slowed in the first quarter, with finance and insurance, retail trade, and agriculture, forestry, fishing, and hunting leading the deceleration.  As shown in the table below, Arkansas was an exception to the pattern of slow growth in agriculture, forestry, fishing and hunting.  The sector breakdown for Arkansas also showed relatively strong growth in nondurable goods manufacturing.  Sectors showing negative growth in the first quarter included retail trade and management of companies and enterprises.

Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

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Arkansas Employment and Unemployment – June 2016

By , July 21, 2017 1:00 PM

Arkansas’ unemployment rate was unchanged at 3.4% in June.  The national average rate increased by 0.1 percentage point to 4.4% for the month, so the gap between Arkansas and the U.S. has widened to a full percentage point.

Source:  Bureau of Labor Statistics

Source: Bureau of Labor Statistics

The data series underlying the unemployment rate continued to show movement in a positive direction:  The number of unemployed Arkansans declined by 238 while the number of employed increased by 9,481.  As a result, the labor force increased by 9,243 for the month.

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

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

There is reason to believe that some of the recent declines in Arkansas’ official unemployment rate might be overstating the actual fall in unemployment. Since the beginning of 2017, the household survey has shown the number of employed rising at an unprecedented rate — expanding at an annual rate of over 5 percent since December 2016.  Comparing the household data to the payroll survey, it appears likely that this rapid pace of household employment growth will ultimately be revised downward.  As illustrated in the figure below, the employment measure from the household survey has grown by 33.6 thousand over the past six months, while the payroll survey shows job growth of only 12.5 thousand.  Although the two measures of employment have slightly different definitions, they should generally be expected to move together over time.  Of the two, it is typically the household measure that is subject to more substantial annual revision.

Source: Bureau of Labor Statistics

Source: Bureau of Labor Statistics

If a downward revision to the household employment data does eventually take place, then the exceptionally low unemployment rate recorded in Arkansas this year would be revised upward.  However, the magnitude of the adjustment to the unemployment rate would be relatively small.  Even taking into consideration the imprecision of the data, Arkansas unemployment rate is statistically significantly lower than the U.S. average.  So in the worst-case scenario, Arkansas’ true unemployment rate is closer to 4% than to 3.5%.  And the conclusion we can draw from examining both data sources is that Arkansas employment has been expanding at a healthy pace for the past 3-1/2 years, with no reason to expect a change in that trend.

Payroll Employment
Turning directly to the payroll survey, Arkansas’ nonfarm payroll employment expanded by 4,700 in June (seasonally adjusted).  The sector recording the largest gains was Leisure and Hospitality Services (+4,200), with most of the gain attributable to Accommodation and Food Services (+3,800).   June is typically a strong month for employment growth in this sector, but the increase in the seasonally-adjusted statistics indicates that the growth was exceptionally strong.  Other sectors adding jobs included Health Services and all sub-categories of Trade, Transportation and Utilities.  Professional and Business Services dropped by 3,000 jobs, with most of the job losses in the category of Administrative and Support Services.

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

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

Compared to a year ago, Arkansas payroll employment is up by 24,900 jobs — an increase of 2.0%.  That rate of job expansion puts Arkansas on the list of 33 states that have experienced statistically significant employment increases over the past 12 months.   In fact, Arkansas ranks #14 on that list.  Service-providing sectors are responsible for most of that job growth, but gains of 1,000 jobs in construction and 2,600 jobs in manufacturing have also provided for net growth in goods-producing employment as well.

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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 here:  Table-Seasonally Adjusted NFPE.

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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

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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%.

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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%.

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

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Arkansas GDP – 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

 

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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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Arkansas Employment and Unemployment – March 2017

By , April 21, 2017 1:06 PM

The Arkansas unemployment rate set another new record low in March: 3.6%.  Having declined by 0.1 percentage point in each of the past four months, the state’s unemployment rate is now 0.9% lower than the national average.

Source: Bureau of Labor Statistics

Source: Bureau of Labor Statistics

March’s decline in the unemployment rate was underpinned by an increase in the number of employed (+4,428) and a decline in the number unemployed (-1,240).  As a result, the participation rate was up for the second consecutive month, after declining steadily during 2016 and into the first part of this year.

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 essentially unchanged in March (seasonally adjusted).  Professional and Business Services continued to show strong growth, increasing by 1,200 jobs from February to March.  Education and Health Services showed an uncharacteristic decline for the month, but remains the single largest generator of job growth among the major super-sectors over the past 12 months.  Construction employment would ordinarily be expected to increase this time of year, but the warm early spring months was associated with earlier-than-expected increases.  As a result, with not-seasonally adjusted employment unchanged in the construction sector in March, the seasonally-adjusted figures register a decline of 800 jobs.  Manufacturing continues to show signs of improvement, having added a cumulative total of 3,100 jobs over the past year.

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

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

Compared to its pre-recession level (December 2007), Arkansas employment has increased by 33,100 jobs — about 2.8% growth.  Over the same period, employment nationally has increased by 5.3%.  That long-run comparison includes a period of relatively stagnant job growth in Arkansas — from around 2011 through 2013.  More recently, Arkansas employment has tracked the national growth rate more closely: Since the end of 2013, Arkansas employment has expanded by 5.7%, compared to 6.2% nationwide.

Source: Bureau of Labor Statistics

Source: Bureau of Labor Statistics

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

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Arkansas Employment and Unemployment – February 2017

By , March 27, 2017 1:23 PM

The February state employment report from the Bureau of Labor Statistics was a strong report for Arkansas overall.  The headline statistic was another decline in the state’s unemployment rate, down to 3.7%.  That represents a new record low for Arkansas’ unemployment rate, and is one full percentage point lower than the U.S. unemployment rate for February.

Source: Bureau of Labor Statistics

Source: Bureau of Labor Statistics

The underlying data from the household survey showed that the number of unemployed Arkansans declined by over one thousand, while the number employed rose nearly 2,500.  After drifting downward for the past 10 months, the labor force increased by 1,346 in February.

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

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

With the Arkansas unemployment rate hitting new record lows, it is useful to note that changes in labor force participation rates have complicated the interpretation of the unemployment statistics.  When the state’s unemployment rate was at a cyclical low of around 5% before the 2008-09 recession, the labor force participation rate in Arkansas was as high as 64%.  The participation rate has fallen sharply since that time and is currently near 58%.  That is, the fraction of the state’s population that is employed or even looking for work now has fallen by around 5-6% over the past decade.  If the workers how have dropped out of the labor force were to be considered officially “unemployed,” the current unemployment rate would be approximately 12%.

Source: Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Payroll Employment
Nonfarm payroll employment rose sharply in February, up by 6,100 (seasonally adjusted*).  The percentage increase for the month (o.5%) was the second-fastest growth rate in the nation (Montana and Nebraska saw increases of 0.6%).  Moreover, the employment total for January was revised upward by nearly 2,000 jobs.

Job growth was distributed across a wide range of sectors.  Goods-producing sectors, in particular, had a very strong month, with Mining and Logging, Construction and Manufacturing all posting gains.  On the service-providing side, Professional & Business Services and Education & Health Services continued to expand at a healthy pace.

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

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

Over the past 12 months, Arkansas payrolls have expanded by 16,300 — a growth pace of about 1.3%.  Over the same period, U.S. job growth has been around 1.6%.

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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