Institute for Economic Advancement

Arkansas Employment and Unemployment – February 2012

By , March 30, 2012 10:30 AM

The unemployment rate for Arkansas 7.6% in February — unchanged from the previous month.   The new data from the U.S. Bureau of Labor Statistics (BLS) and the Arkansas Department of Workforce Services (DWS) showed that changes in the number of employed and unemployed were smaller than in recent months, but the direction of the changes continued to be favorable:  The number of employed was up approximately 3,400 and the number of unemployed was down by 400.  February was the 7th consecutive month of rising employment and falling unemployment.  The U.S. unemployment rate was also unchanged in February, holding at 8.3%.

Unemployment Rates

Source: Bureau of Labor Statistics

The payroll survey showed a small net increase in jobs for the month, up approximately 700 jobs (seasonally adjusted).  Sectors showing job losses included Trade, Transportation & Utilities (-1,800), Education & Health Services (-700), and Manufacturing (-200).  Government employment was up 2,300, largely attributable to an increase in State Government employment (+2,000).  Leisure & Hospitality Services and Other Services were also up for the month.

Arkansas Payroll Employment

Source: Bureau of Labor Statistics

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

Updated Forecasts for 2012 and 2013

By , March 29, 2012 1:00 PM

At the Arkansas State University Economic Outlook Conference today, we presented revised and updated forecasts for some key economic indicators for the Arkansas economy.  At the time that the original forecasts were complied in late October 2011, data for some series were available only through the first half of the year (e.g., personal income).  Some of the statistics that were available through the third quarter have subsequently been revised (particularly employment data).  Hence, the original projections for 2012 and 2013 incorporated forecast estimates of how 2011 would turn out.  Now that we have at least preliminary data for all of 2011, it seems a propitious time to revisit the forecasts.

In general, the data have confirmed our expectations that 2011 would show a slowdown in the pace of  the economic recovery overall, but with clear signs of improvement in the final months of the year.  In some cases, our expectations for improvement in the waning months of 2011 were exceeded — in other cases our outlook was overly optimistic.  Accordingly, the forecast revisions are mixed. And the outlook — in broad strokes — continues to be one of steady but unremarkable growth as we slowly emerge from the aftermath of the 2008-09 recession.

Personal Income
Yesterday’s data-release from the Bureau of Economic Analysis showed that total Personal Income in Arkansas grew by 3.7 percent in 2011 (Q4/Q4).  This fell closely in line with our forecast of 3.6% growth for the year.  Hence revisions to the outlook are minor.  Due, in part, to lower-than-expected transfer payments in the second half of 2011, the forecast for personal income growth in 2012 has been revised down from 5.1% to 5.0%.  The forecast for 2013 is unchanged at 3.9%.

Personal Income

Sources: Bureau of Economic Analysis, Institute for Economic Advancement

Arkansas Taxable Sales Including Gasoline
Our proxy for state retail sales, Arkansas Taxable Sales Including Gasoline (ATSIG), finished 2011 with a Q4/Q4 growth rate of 5.0% — slightly higher than the 4.4% rate in the forecast.  Some of this strength is expected to continue into 2012, prompting a slight upward growth revision from 3.2% to 3.3%.  (The slowdown from 2011 reflects, in part, the expectation of slightly lower inflation rate.)  Our original forecast included a (somewhat anomalous) slowdown in growth for 2013 (2.0%).  Such a slowdown now appears less likely, and we are now forecasting 2013 growth of 3.9%.

Arkansas Taxable Sales Including Gasoline

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

Home Sales
Arkansas home sales had been steadily improving during 2011 (on a seasonally-adjusted basis), but after having been supported by home-buyer tax credit programs in the previous two years, 2011 was still expected to be have the lowest total annual sales volume in recent memory.  Sales in the last three months of the year were fairly strong, but were somewhat below our expectations.  Compared to the previous year, total sales volume was down slightly more than forecasted: down 2.5% from the previous year’s (revised) sales figures.  Carrying this weakness forward into the projected sales trajectory, the forecasts for 2012 and 2013 have been revised downward.  Expectations of a double-digit growth rate in 2012 have given way to a revised forecast of +7.5%.  Sales are still expected to improve by 4.3% in 2013, but end the year with a lower sales volume than previously forecasted.

Home Sales

Sources: Arkansas Realtors Association, Institute for Economic Advancement

Payroll Employment
At the UALR Arkansas Economic Forecast Conference, we predicted that downward revisions to the payroll employment data would show that the year would end with a lower level of employment than the previous year — in sharp contrast to data that was available at the time.  The actual data revision was slightly larger than anticipated, showing a Q4/Q4 employment loss of 0.4%, rather than the 0.2% that had been forecasted.  Nevertheless, relatively strong job growth did materialize in the fourth quarter of 2011, as anticipated.  Accordingly, the growth path for employment has not been revised (+1.3% in 2012 and +1.5% in 2013), but the path has been benchmarked to a slightly lower starting point.

Payroll Employment

Source: U.S. Bureau of Labor Statistics, Institute for Economic Advancement

Unemployment Rate
Unemployment rate data for 2011 were also recently revised.  The updated statistics showed that unemployment was not quite as high in mid-2011 as previously estimated.  Moreover, the rate dropped over the last three months of the year much more rapidly than expected.  Consequently, our unemployment rate forecasts have been revised downward significantly.  2011 ended with a rate of 7.9%, instead of the expected 8.2% rate.  The downward trajectory of unemployment has been adjusted downward from this lower starting point.  We now expect the unemployment rate to average 7.4% in the fourth quarter of 2012 (instead of 7.9%) and to fall to 7.0% by the fourth quarter of 2013 (instead of 7.6%).  These would be welcome developments, if realized.  The risk to this revised forecast is that new entrants and re-entrants to the labor force might put upward pressure on the unemployment rate as the labor market continues to improve.

Unemployment Rate

Sources: U.S. Bureau of Labor Statistics, Institute for Economic Advancement

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Methodological Note:  The original forecasts of November 2011 were produced using the Moody’s Economy.com Arkansas model, benchmarked to a composite of national economic forecasts.  The revised projections presented here represent adjustments to the original forecasts in light of new and revised data.   Underlying forecast assumptions and model estimates were not generally re-evaluated as a part of this exercise, but updated model forecasts for the unemployment rate and retail sales were factored into the analysis.

Arkansas Personal Income in 2011

By , March 28, 2012 12:16 PM

According to the latest statistics from the U.S. Bureau of Economic Analysis, Arkansas personal income rose 0.6% in the fourth quarter of 2011 — a somewhat smaller rate of increase than the U.S. average rate of 0.8%.   The new data release also included upward revisions to Arkansas personal income in the first three quarters of 2011.  From the fourth quarter of 2010 through the end of 2011, the latest figures show that personal income was up 3.7% in Arkansas and up 4.6% for the U.S.   Farm income was particularly weak in 2011:  Although it accounts for less than 2% of total personal income in the state, farm income declined 17.3%  from the fourth quarter of 2010 through the fourth quarter of 2011.  Arkansas nonfarm income was up 4.0% over the same period.  As shown in the figure below, total personal income in Arkansas ended the year approximately 5.5% higher than its previous cyclical peak in 2008:Q2.  U.S. personal income was 4.6% above the previous peak.

Source:  Bureau of Economic Analysis

Excluding government transfer payments, the decline in incomes during the recession was substantially larger than for total personal income, and the recovery has taken correspondingly longer.  The latest data show that Personal Income Less Transfers (PILT) rose by 4.8 percent in Arkansas during 2011 (Q4/Q4).  For the U.S. overall, PILT was up by 5.8% over the same period.  For both Arkansas and the U.S., a slowing pace of transfer payments was a factor dampening total income growth over the second half of 2011.  As measured by PILT, Arkansas remains somewhat ahead of the nation in terms of economic recovery:  At the end of 2011, PILT was 2.5% above its previous cyclical peak in Arkansas, and only 1.7% higher for the U.S.

Source: Bureau of Economic Analysis

Because this release was the first to include data for the entire year, the BEA report also summarized per capita personal income figures for 2011.  In Arkansas, per capita income rose 3.7% to $34,014.  For the entire U.S., per capita income was up 4.3% to $41,663.  As of 2011, therefore, per capital personal income in Arkansas stood at 81.6% of the national average — leaving the state’s ranking among the 50 states plus District of Columbia unchanged at #45.

Source: Bureau of Economic Analysis

One consideration to bear in mind when evaluating personal income statistics is that they are not adjusted for inflation.  Typically, the the national price index for personal consumption expenditures is used to adjust the nominal figures for inflation.  By this measure, prices rose 2.5% in 2011, so the 3.7% increase in nominal per capita personal income correponds to a real (inflation-adjusted) increase of only 1.2%.

Metro Area Unemployment Rates – Seasonally Adjusted

By , March 23, 2012 2:36 PM

The  smoothed seasonally adjusted unemployment rate estimates have been updated by the BLS.  As described in a previous post,  the smoothed seasonally adjusted (SSA) estimates are processed using an algorithm that incorporates a long-run trend smoothing procedure.  Hence, the estimates show less month-to-month variability than data that produced using only seasonal adjustment techniques.

The table below shows that unemployment rates declined in all of Arkansas MSAs in January.  The largest monthly declines (-0.4 percentage points) were registered for Fayetteville, Memphis, and Pine Bluff. 

Source: Bureau of Labor Statistics

As shown in the figure below, the month-over-month declines in unemployment continue a trend that emerged in the final months of 2011.  The recent declines have largely reversed the run-up in unemployment rates that we saw during the summer months.

Source: Bureau of Labor Statistics

Metro Area Employment and Unemployment – January 2012

By , March 23, 2012 12:11 PM

New data on metro area employment and unemployment came out this morning.  The BLS news release noted that  “Unemployment rates were lower in January than a year earlier in 345 of the 372
metropolitan areas.”  All of Arkansas’ MSAs were included in this total.  The changes ranged from down 0.3 percentage points in Fort Smith and Jonesboro to down 0.9 in the Memphis MSA.  The not seasonally adjusted data showed increases from December unemployment rates, but these largely represented seasonal effects associated with the end of the holiday shopping season.  Smoothed seasonally adjusted unemployment rates will be available later in the day.

Source: Bureau of Labor Statistics

The seasonally-adjusted nonfarm payroll employment data (which reflect the recent benchmark revisions) show monthly employment increases in six of Arkansas MSAs.  Fort Smith and Memphis both saw monthly declines.  Compared to the previous year, employment was up in all metro areas except Fort Smith.  In fact, the  BLS news release reported that Fort Smith had both the highest number of job losses and highest percentage decrease of all the nation’s MSAs.

Source: Bureau of Labor Statistics

Since the beginning of the recession in December 2007, net employment changes are positive only in Jonesboro and Texarkana.  Net employment losses in the other metro areas of the state range from 1.5% in Fayetteville to 12.8% in Fort Smith.

Revised Data on Arkansas Taxable Sales

By , March 19, 2012 4:19 PM

Final data on Arkansas Taxable Sales (ATS) for 2011:Q4 are now available, but there is little news to report.  Based on new information from the Department of Finance and Administration on sales tax and gasoline tax receipts, the data on both ATS and the broader measure — Arkansas Taxable Sales Including Gasoline (ATSIG) — were nearly identical to our preliminary estimates.  Growth rates for both measures are summarized in the table below.

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

Preliminary data for January are now available as well.  Taxable sales in January were up 0.55% from the previous month (a 6.7% annual rate).  Compared to the previous January, ATS was up 6.0%.  With gasoline prices rising, ATSIG rose even more sharply in January.  Compared to the previous month, ATSIG was up by over a full percentage point (approximately a 12.6% annual rate).  From the previous year, ATSIG was up by 6.4%.

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

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The Arkansas Taxable Sales (ATS) series 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 2011:Q4 (Excel file)

 

Employment Data Revisions – Some Additional Details

By , March 14, 2012 4:38 PM

Yesterday’s employment report included the annual benchmark revisions to the payroll employment data.  Each year, the numbers in the Current Employment Statistics (CES) data set are updated to reflect more accurate figures from the Quarterly Census of Employment and Wages (QCEW).  This year’s revision “benchmarked” the CES data to levels consistent with the QCEW as of 2011:Q1.  In addition, data from the QCEW itself were revised for the period covering last year’s benchmarking.  Hence, the revision process affects employment growth estimates for both 2010 and 2011.  (New seasonal factors are also estimated for the period 1990-present, but revisions from this source are generally small.)

The table below shows employment growth by sector for 2010 and 2011 (seasonally adjusted data).  The first two columns report the data as previously published (as of January 2012).  The second two columns show the revised data that came out yesterday.  The first line shows that total employment growth in Arkansas was revised downward in both years.  Employment growth in 2010 was marked down from 12,600 to 8,600 jobs.  The revision for 2011 was even more substantial:  The previously-published data showed an increase of 8,000 jobs for the year, whereas the revised data show a loss of 3,100 jobs.

Source: Bureau of Labor Statistics

The substantial mark-down in employment growth for 2011 was not attributable to any one sector.  Several sectors were subject to sharp downward revision, including Contruction, Manufacturing (particularly Non-durable Goods), Wholesale Trade, Financial Activities, Education & Health Services, and Leisure & Hospitality.  A few sectors added more jobs than we had previously thought:    Retail Trade and Durable Goods Manufacturing are two examples.

The next table shows the revisions to employment growth in the state’s Metropolitan Statistical Areas (MSAs).  The most substantial revision was for Fort Smith.  Previously-published data had shown that Fort Smith lost 1,700 jobs in 2011.  The revised data show job losses totalling 7,700.  Data for Hot Springs were also subject to a substantial revision:  Job growth of 1,500 was marked down to zero for 2011, and a small gain in the previous year was revised to show a net job loss.    In contrast, data for Jonesboro were revised upward for both years. 

Revisions to the data for the state’s two largest MSAs were relatively minor.  Northwest Arkansas saw a very small downward revision for 2010 and an upward revision for 2011.  In Central Arkansas job growth was revised slightly downward for both years.  In both MSAs, employment growth remained positive for both years.

Source: Bureau of Labor Statistics

Of course, even the revised data are subject to further revision.  This time next year we’ll see yet another version of the job-growth statistics for 2011.

Arkansas Employment and Unemployment – January 2012

By , March 13, 2012 11:22 AM

The latest employment report from the U.S. Bureau of Labor Statistics (BLS) and the Arkansas Department of Workforce Services (DWS) show that the unemployment rate in Arkansas fell by 0.2 percentage points in January to 7.6%.  This was the fourth consecutive monthly decline.  The Arkansas unemployment rate is now 0.6 percentage points lower than its (revised) peak of 8.2 in July 2011.

Source: Bureau of Labor Statistics

The  underlying details in the January unemployment report support a positive interpretation:  The number of employed persons was up by nearly 6000, while the  number of unemployed was down almost 2000.  As a result, the unemployment rate decline occurred against a backdrop of a substantial expansion of the labor force.   Since the unemployment rate peak in July 2011, the number of employed has risen by nearly 24,000 and the number of unemployed is down 6200.

The independent payroll survey showed modest job gains for the month, with increases spread across several sectors.  Although the not-seasonally-adjusted data showed a net decline for the month, the job losses were largely seasonal as holiday-related employment declined (particularly in the Retail Trade and Leisure & Hospitality sectors).  Seasonally adjusted data showed an increase of 4600 jobs for the month. Goods producing sectors saw an increase of 2300 jobs, with most of the gains in construction. Service providing sectors showing gains included Trade, Transportation & Utilities (+2200), Education & Health (+1700), and Leisure & Hospitality (+1700).  These increases were partly offset by notable job-losses in Professional & Business Services (-1100) and Government (-2100).

Source: Bureau of Labor Statistics

Compared to a year ago, the newly-revised payroll data show a net increase of 4300 jobs.  Education & Health Services continued to be the strongest-performing sector over the past 12 months, adding 4000 jobs.  In contrast, manufacturing employment has fallen by 4600 jobs.

Benchmark Revisions

This monthly report on payroll employment included the annual benchmark revisions to the data.  As previously reported, we were anticipating a sharp downward revision to the jobs data for early 2011.  As of the new benchmark date (2011:Q1) we expected to see a downward revision of approximately 11,000 jobs.  The actual revision was down 10,400.  Estimation of new seasonal factors and updated source-data also resulted in a downward revision to the third-quarter statistics.  At the end of 2011 (December) total payroll employment is now estimated to have been 1161.3 thousand, down 14.3 thousand from the previously-estimated 1175.6 thousand.  The revised data now show that 2011 was a year of negative net employment growth.  From December 2010 through December 2011, total payroll employment in Arkansas fell by about 3,100 jobs.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

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

Unemployment Rate Revisions

By , March 9, 2012 2:32 PM

Next week we’ll see the results of the long-awaited benchmark revisions to payroll employment data for Arkansas.  In the meantime, the Bureau of Labor Statistics (BLS) has completed its annual revision of the Local Area Unemployment Statistics (LAUS).  Data for the LAUS are based on the same concepts and definitions as the national unemployment rate figures, but are calculated using statistical models that incorporate information from a number of sources.  Each year, the BLS revises labor force and unemployment data to incorporate updated population data, other data revisions, and reestimation of statistical models.

The revised figures for Arkansas’ unemployment rate show a slightly different pattern than did the previously-published data.  As shown in the figure below, the revised data show that the unemployment rate was higher than previously published from mid-2010 through mid-2011.  On the other hand, the unemployment-rate surge that we saw in the latter part of 2011 has been largely revised away.  For the month of December 2011, the new data show the rate at 7.8% — slightly higher than the 7.7% that was previously reported.

Source: Bureau of Labor Statistics

Metro Area Unemployment Rates

During 2011, the BLS began publishing smoothed seasonally-adjusted metropolitan area estimates for labor force and unemployment data.  The smoothed seasonally adjusted (SSA) estimates are processed using an algorithm that incorporates a long-run trend smoothing procedure.  Hence, the estimates show less month-to-month variability than data that is subjected to more conventional seasonal-adjustment techniques.  Beginning with the next Metropolitan Area Employment and Unemployment news release, the Arkansas Economist will begin publishing these estimates instead of the figures calculated in-house by the Institute for Economic Advancement.

Comparing the chart below to the most recent analysis of metro area unemployment rates, the overall pattern of unemployment-rate movements is basically the same but with somewhat lower volatility.  Because the smoothing procedure reduces the magnitude of month-to-month changes, the SSA data ended the year showing higher unemployment-rate levels than a simple seasonal adjustment technique. (That is, some of the rapid decline in unemployment rates that occurred in the last three months of the year is treated as transitory by the smoothing algorithm.)  The SSA data make for less dramatic headlines — rather, they provide a more measured evaluation of changes in metro area unemployment rates over time.

Source: Bureau of Labor Statistics

 

 

January Home Sales

By , March 5, 2012 4:47 PM

The latest data on Arkansas home sales were released by the Arkansas Realtors® Association (ARA) today.  January is typically the slowest sales month of the year, so it is particularly difficult to interpret January sales data in the context of longer-term trends.  As shown in the figure below, home sales for the month were down slightly from 2011 (-1.1%).  However, sales in January 2011 did not fall as sharply as usual for the month.

Source: Arkansas Realtors® Association

Seasonally adjusting the data removes the recurring annual pattern from the series.  As shown below, seasonally-adjusted data for January 2012 are in line with observations from recent months.  If sales trends continue at their recent pace, 2012 home sales are expected to average just over 2000 homes per month.  As illustrated by the not-seasonally-adjusted data, however, most of the sales for the year are expected to take place in the summer months.

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

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