Arkansas Home Sales – 2012:Q2

By , July 25, 2012 10:16 AM

The Arkansas Realtors® Association gave us a two-for-one special yesterday:  home sales statistics for both May and June.  Compared to the previous year, sales of new and existing homes were up 7.3% in May and up 0.2% in June.  As shown in the figure below, sales are showing their typical seasonal increase for the two months, but the trajectory shows little apparent improvement over the weak sales totals we saw last year.  For the first six months of the year, total sales were 11,687, up 4.3% from the 2011 pace.

Source: Arkansas Realtors® Association

The slow rate of increase in home sales is illustrated even more clearly after the data are seasonally adjusted.  As shown in the figure below, monthly sales have been hovering near the 2,000 per month pace for the past several months.  Relative to that trend, however, the months of February and April were particularly weak.  After seasonal adjustment, the sales pace in June was running right at the 2000/month rate.

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

Month-to-month changes in home sales can be subject to short-run idiosyncratic developments, so it is helpful to look at quarterly average figures to get a better sense of trends.  With April and May running below trend, the sales total for the second quarter declined from its first-quarter pace.

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

Our most recent forecast for 2012 home sales was 25,000, up 7.5% from 2011.  If sales are to reach that total, we’ll have to see some improvement in the second half of the year.  Given the usual seasonal pattern of home sales, the months of July and August will be crucial.

Arkansas Employment and Unemployment – June 2012

By , July 20, 2012 11:22 AM

The unemployment rate in Arkansas ticked downward from 7.3% in May to 7.2% in June.  According to the report from the Bureau of Labor Statistics (BLS), Arkansas was one of only 11 states to see a declining unemployment rate for the month.  Twenty-seven states recorded increases, and 12 states had no change.  The number of unemployed Arkansans declined by 1,884, falling to 99,185.  This was the first time Arkansas unemployment has fallen below 100,000 since February 2009.

The news from the household survey was not entirely positive, however.  The number of employed declined by 2,369 in June after showing essentially no change in the previous month.  As a result, the Arkansas labor force contracted by 4,253 — the first monthly downturn since July 2011.  Over the past several months, the combination of declining unemployment and an expanding labor force had distinguished Arkansas as one of the states where labor markets seemed to be outperforming the national average.

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

Data from the employer survey confirmed the weakness in employment growth for the month.  Nonfarm payrolls were down 4,300 from the previous month (seasonally adjusted).  Most sectors of the economy experienced job losses, with the notable exception of Education & Health Services, which saw an increase of 2,000 jobs.  Leisure & Hospitality Services, Financial Services, and Wholesale trade also showed slight increases.

On a year-over-year basis, the seasonally adjusted figures show a net increase of 6,900 jobs since June 2011, with gains concentrated in Education & Health Services, and Leisure & Hospitality Services.  Employment in goods-producing sectors continues to languish:  Construction employment was down 3,000 from the previous year, and Manufacturing employment was down by 1,800.

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

As recently reported here at the Arkansas Economist, the latest data from the Quarterly Census of Employment and Wages (QCEW) seems to be indicating that the payroll employment data will eventually be revised upward.  Specifically, the QCEW data show must stronger job growth in the latter part of 2011 than current employment reports have indicated.  If we take these likely revisions into account, payroll employment from June 2011 through June 2012 has expanded by over 16,000 instead of the 6,900 implied by today’s report.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

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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.

Employment in Arkansas – Reconciling the Accounts

By , July 10, 2012 1:53 PM

Over the past several months, the Arkansas employment reports have been providing mixed signals.  On the one hand, the unemployment rate has declined dramatically as household employment has risen.  Meanwhile, the payroll employment statistics have shown rather sluggish growth rates.  The chart below compares these two measures of employment.  Although they are compiled from different surveys and measure slightly different concept of employment, the overall patterns of the two series are quite similar.*  The difference between growth rates over the past several months is apparent, however.  From May 2011 through May 2012, household employment has increased by 2.6% while payroll employment has gained only 0.6%.

Source: Bureau of Labor Statistics

A third data source helps to reconcile these two divergent series.  The Quarterly Census of Employment and Wages (QCEW) represents a more comprehensive and accurate version of the payroll employment statistics.  In fact, the statistics from the QCEW represent the source-data for annual revisions of the payroll employment figures.  These revisions are often substantial (see here and here, for example).

Although we are still a long way from the annual revisions, the latest data from the QCEW already suggest that there will be large revisions to payroll employment statistics for the second half of 2011.  Using some simple statistical techniques to estimate the magnitude of the eventual data revisions, it appears that cumulative revisions to the end of 2011 will result in an employment level more than 11,000 higher than currently-published statistics.  The upward revision for October alone is expected to be more than 18,000.  As shown in figure below, the anticipated revision will raise the growth profile of payroll employment substantially.  With these estimated revisions included, payroll employment growth from May 2010 to May 2011 amounts to 1.5%, narrowing the observed gap between houshold and payroll employment growth.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

Because the actual benchmark revision will use QCEW data through the first quarter of 2012, the magnitude of the ultimate payroll data revision may end up being even larger.  What we can say for sure at this point is this:  The relatively weak growth of payroll employment observed over the past year is largely the result of preliminary data that under-measure the true extent of Arkansas employment growth.

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*The household employment statistics are based on survey measures and local economic models, and are compiled under the Local Area Unemployment Statistics (LAUS) program.  The payroll data are based on a survey of firms, and are published as part of the Current Employment Statistics (CES) program.

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