Institute for Economic Advancement

Metro Area Unemployment Rates – April 2012

By , May 30, 2012 4:17 PM

The Bureau of Labor Statistics reported today that unemployment rates in Arkansas metro areas were down sharply in April compared to a year earlier.  Year-over-year changes ranged from -0.5 percentage points in Little Rock to -1.4 percent in Memphis.  Broadly speaking, the metro areas with the highest unemployment rates a year ago have seen the largest declines over the past 12 months.

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

Smoothed seasonally adjusted estimates for April showed monthly unemployment-rate declines in every metro area except Hot Springs, where the rate was unchanged.  Unemployment was down by 0.2% in  Fort Smith, Pine Bluff, and Texarkana.  Declines of 0.1% were recorded for Fayetteville, Jonesboro, Little Rock, and Memphis.

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

As shown in the chart below, the latest data continue to follow a clear trend of improving employment conditions across the state.

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

Arkansas Home Prices – 2012:Q1

By , May 24, 2012 8:32 AM

The latest data from the Federal Housing Finance Agency (FHFA) suggest a slight increase in home prices nationwide, with prices in Arkansas increasing at a rate above the national average.  Yesterday’s FHFA report emphasized the seasonally-adjusted purchase-only index which showed U.S. house prices up 0.6% from the previous quarter, and up 0.5% from the same quarter a year earlier — “the first annual increase since 2007.”  By the same measure, house prices in Arkansas were up 0.3% for the quarter and up 1.3% from a year earlier. 

Source: Federal Housing Finance Agency

The pattern of home-price changes across the nation shows a wide divergence in house price changes.  Prices continue to decline in some areas of the country that experienced particularly dramatic home price increases during the housing price bubble and subsequently have experienced large declines (e.g. Nevada, California, Illinois and Georgia).  Other states appear to be recovering (e.g. Florida, Arizona, and Michigan).  Arkansas ranks #22 among the 50 states for its rate of home-price appreciation over the past year.

Source: Federal Housing Finance Agency

The FHFA all-transactions indexes (which include home refinancing appraisals) showed considerably less price-appreciation.  For the U.S., the all-transactions index was down 1.3% for the quarter and down 1.4% compared to a year ago.  In Arkansas, this index of house prices fell slightly from the previous quarter (-0.7%) but was up 0.5% from the first quarter of 2011.

The all-transactions index is important because it is the only measure that is published for all of the nation’s metropolitan areas.  As shown in the table below, first-quarter changes in home prices for Arkansas metro areas were mixed.  Compared to the fourth quarter of 2011, prices were down in five of the state’s metro areas, but showed fairly large increases for Hot Springs, Pine Bluff and Texarkana.  Compared to a year earlier, however, prices were up in all MSAs except for Fayetteville and Memphis.  From a longer-term perpsective, these are also the only two metro areas in which prices are lower than five years ago (2007:Q1). 

Source: Federal Housing Finance Agency

Labor Force Participation

By , May 22, 2012 4:22 PM

Last Friday’s employment report suggested a contrast between the underlying statistics driving the Arkansas and U.S. unemployment rates.  In particular, the national unemployment rate fell in April but this was at least partly attributable to a decline in the size of the labor force.  Analysts were quick to point out that this phenomenon did not represent positive economic news (see, for example, the Washington Post article:  “Jobs report shows effects of the incredible shrinking U.S. labor force“).  However, the April decline in Arkansas’ unemployment rate took place in the context of an increase in the state’s labor force.   Quoted in the Arkansas Democrat-Gazette, I commented that “we’re seeing the labor force expanding and the employment market is able to absorb those new workers.”

The contrast between the labor force movements in Arkansas and the U.S. reflects more than just a single month’s data:  recent trends in labor force participation rates show distinctly different patterns over the past 9 months.  From July 2011 through April 2012, the unemployment rates for Arkansas and the U.S. both declined by one full percentage point.  But as shown in the chart below, Arkansas labor force participation rate rose from 60.6% to 61.3%, while the U.S. participation rate declined from 64.0% to 63.6%.

Source: Bureau of Labor Statistics

The increase in labor force participation in Arkansas appears to represent a long-awaited reversal of the recessionary decline.  For the U.S., however, the participation rate shows no sign of departing from the downward trend it has followed since the beginning of the recession.

A closely-related measure — the employment/population ratio — reveals another perspective on the difference between labor-market conditions in Arkansas and the U.S. as a whole.  As shown in the chart below, the U.S. employment/population ratio has been flat throughout the period of economic recovery.  Recent gains in nationwide employment have kept pace with population growth, leaving the ratio little-changed.  In Arkansas, however, recent employment growth has outpaced population growth, leading to a higher proportion of the potential workforce with jobs.

Source: Bureau of Labor Statistics

These statistics are not definitive — they are subject to a fairly wide range of uncertainty and are subject to future revision.  Taken at face-value, however, the labor-force participation rate and employment/population ratio provide evidence to support the conclusion that Arkansas’ falling unemployment rate truly reflects improvement in the state’s labor-market conditions.

Arkansas Employment and Unemployment – April 2012

By , May 18, 2012 10:43 AM

The unemployment rate in Arkansas declined another two-tenths of a percent in April, dropping to 7.2%.  When the U.S. unemployment rate was reported to have fallen in April, many commentators pointed out that the drop was associated with a decline in the labor force.  In Arkansas, however, the underlying statistics are more positive:  The number of unemployed persons declined by 2,800 and the number of employed rose by nearly 3,300, so the labor force increased by almost 500.  April marks the 9th consecutive month in which both the number of employed and the labor force increased, and the number of unemployed decreased.

Source: Bureau of Labor Statistics

The independent report on nonfarm payroll employment also conveyed good news for Arkansas.  Seasonally adjusted data show that employment increased by 5,500 in April, bringing total employment almost back to the peak level observed in April 2011.

Source: Bureau of Labor Statistics

Employment gains were evident in several sectors of the Arkansas economy.  Gains were particularly strong in Education & Health Services and Leisure & Hospitality Services.  Employment in Retail Trade also showed a large increase.  Goods producing sectors also expanded, with welcome employment gains in both Construction and Manufacturing.  Compared to the start of the recession in December 2007, total employment in Arkansas is down by 37,500 — largely due to contraction of the manufacturing sector.

Source: Bureau of Labor Statistics

April’s payroll employment increases do not appear to have been spread evenly around the state.   Data for metropolitan statistical areas (MSAs) show month-to-month gains in Fayetteville, Fort Smith, and Jonesboro.  Employment in Texarkana was unchanged, but the state’s other MSA’s showed declines.  Fort Smith has suffered the largest cumulative drop in employment since the start of the recession, so April’s increase of 2,200 jobs (+2.0%) represented a welcome departure from trend.  The addition of 1,400 jobs in Northwest Arkansas (+0.7%) brings total employment for the Fayetteville MSA up to a level slightly higher than at the beginning of the recession.  Jonesboro and Texarkana are the only other two MSAs in Arkansas that have this far acheived that distinction.

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, are available hereTable – Seasonally Adjusted NFPE.

 

Arkansas Taxable Sales – 2012:Q1 (Preliminary*)

By , May 10, 2012 10:55 AM

Recently-released sales tax data from the Arkansas Department of Finance and Administration indicate that Arkansas Taxable Sales (ATS) increased by 1.7% in the first quarter of the year (seasonally adjusted). ATS growth had slowed to zero in the latter half of 2010 and the first half of 2011, but the most recent observation represents the third consecutive quarter of impressive growth.  On average, ATS has increased at a 7.9% annual rate over the past three quarters.

Gasoline prices were up in the first quarter, averaging $3.44 for a gallon of regular unleaded (up 22 cents from the fourth quarter of 2011).  Seasonally-adjusted gasoline sales also increased.  As a result, spending on gasoline increased by 9.1% and Arkansas Taxable Sales Including Gasoline (ATSIG) increased by 2.3%.  ATSIG growth in the first quarter was stronger than expected, coming in 1.8% ahead of the pace implicit in the most recent forecast posted on the Arkansas Economist.

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

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

The growth of ATSIG continues to compare favorably to statistics on national retail sales.  According to recently-revised data from the Census Bureau, U.S. Retail Sales increased by a total of 5.3% over the past three quarters.  Over the same period, ATSIG increased by 6.3%.

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

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Arkansas Taxable Sales (ATS) is calculated by the Institute for Economic Advancement to serve as a timely proxy for Arkansas retail sales. The series is derived from sales and use tax data, adjusting for the relative timing of tax collections and underlying sales, changes in tax laws, and seasonal patterns in the data.  Arkansas Taxable Sales Including Gasoline (ATSIG) incorporates data on the state motor fuel tax and gasoline prices from the Oil Price Information Service.

A spreadsheet of the data is available here: Arkansas Taxable Sales Data 2012:Q1 (Excel file)

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

Arkansas Home Sales – 2012:Q1

By , May 4, 2012 7:30 AM

Yesterday’s report from the Arkansas Realtors® Association showed that March home sales were up 1.1% from a year earlier.  In the highly seasonal pattern of home sales, March is typically the beginning of a spring surge leading up to the peak summer sales months.  As shown in the chart below, that pattern is holding true this year with March sales only slightly ahead of last year’s pace.  Since the sharp downturn in sales leading up to the recession of 2008-09, last year was the first year in which the market was not supported by Federal home-buyers’ tax credits, making it the lowest sales-year in recent history.  (Sales were boosted primarily in the terminal months of the tax credit programs:  November 2009 and April 2010.)  Starting from the low base in 2011, sales are expected to show a fairly sizable improvement in 2012.

Source: Arkansas Realtors® Association

After applying statistical techniques to adjust for seasonal patterns, recent trends become more apparent.  Following a post-tax-credit “hangover” and subsequent rebound, sales have been slowly but steadily increasing during 2011 and 2012.  Monthly observations show that February and March are down slightly from the January sales pace.  However, the not-seasonally-adjusted patterns make it clear that January contributes little to the total annual sales pace.

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

Month-to-month changes are subject to considerable variability:  A few days difference in closing dates can result in home sales being recorded in one month or another.  Hence, it is often useful to look at quarterly totals to evaluate recent trends.  In the quarterly chart below, the steady increase in home sales even more evident.  Yesterday’s news release from the Arkansas Realtors® Association emphasized this quarterly perspective, reporting that first quarter sales were up 6% from the previous year — a summary that accurately summarizes the first-quarter sales pace.

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

Although sales have been steadily improving, the first quarter total was slightly lower than the most recent forecast posted on these pages.  Nevertheless, total sales for 2012 will depend far more heavily on market activity during the peak summer months.  Stay tuned.

Metro Area Unemployment Rates – March 2012

By , May 3, 2012 8:28 AM

Yesterday, the Bureau of Labor Statistics reported that unemployment rates in March were down from the previous year in 342 of the nation’s 372 metropolitan areas.  All of Arkansas’ metro areas were included in this total.  Year-over-year changes ranged from -0.1 percentage point in Little Rock to -1.1 percent in Memphis.

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

Smoothed seasonally adjusted estimates showed that the most recent changes in unemployment (from February to March) also indicated improved labor market conditions in the state’s metro areas.  The Hot Springs unemployment rate was unchanged at 7.6%, Little Rock was down 0.1 percentage points to 6.6%, and all the state’s other metro areas showed declines of  0.2 percentage points.

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

 

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