Arkansas Economic Development Institute

Metro Area Employment and Unemployment — December 2012

By , January 30, 2013 11:40 AM

Unemployment rates in Arkansas metro areas ratcheted up in December — a typical seasonal pattern.  After seasonal adjustment, however, rates were essentially unchanged across the state.  As shown in the table below, unemployment rates were lower than the previous year in all of Arkansas’ metro areas, with declines ranging from -0.3% in Memphis to -1.2% in Texarkana (not seasonally adjusted).  Across the nation, the Bureau of Labor Statistics reported that unemployment rates were down from the previous year in 290 of the 370 metropolitan areas, higher in 68 metro areas, and unchanged in 14 areas.

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

December unemployment rates were up from the previous month, but such increases are typical of December when schools and universities break for the year-end holidays.  The BLS smoothed seasonally adjusted estimates provide a more informative comparison of month-to-month changes.  The smoothed seasonally adjusted numbers show little change in unemployment rates across the state.  Rates ticked down by 0.1% in Fort Smith and Texarkana and ticked up by 0.1% all the other metro areas except Jonesboro (which was unchanged).

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

Payroll Employment
Nonfarm payrolls expanded in December for Jonesboro (+1.0%) and Hot Springs (+0.3%), but were unchanged or lower the state’s other metro areas.  Compared to December of 2011, employment was up in Fayetteville, Jonesboro, Pine Bluff, and Texarkana.  However, it was unchanged or lower in Fort Smith, Hot Springs, Little Rock, and Memphis.

Source: Bureau of Labor Statistics (Current Employment Statistics)

As detailed last month, the next publication of metro area employment data will incorporate the annual benchmark revisions.  The revised data will show a somewhat different picture of employment conditions around the state, particularly in the figures for cumulative employment changes over time.  The table below details our best estimates of what the revised data will indicate.  The new figures will show that employment declined during 2012 in only two metro areas:  Little Rock and Memphis.  The revised data are expected to show a substantial upward revision to the data for Fort Smith, with the result that cumulative changes since the trough of February 2010 will be positive for all metro areas in the state.   On the other extreme, payroll data for Texarkana are expected to be revised downward — resulting in the reversal of cumulative gains since the pre-recession peak of December 2007.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

These expected revisions are only estimates.  Data for metro areas can also be subject to substantial changes in estimated seasonal factors, so the post-benchmark data may differ from the figures summarized in the table above.  Nevertheless, the magnitude of expected revisions for Fort Smith and Texarkana, in particular, are likely to be notable.

Income and Price Parities – Implications for Arkansas

By , January 29, 2013 4:02 PM

“After adjusting for a relatively low cost of living, incomes in Arkansas allow for a higher standard of living than in some of the higher-cost regions of the country.”

It is widely recognized that changes in income and spending over time should be adjusted for changes in prices; i.e., inflation.  Comparisons of income across countries are also routinely adjusted for differences in prices using exchange rates or other relative price measures.  Less common is the adjustment of state and local data to account for differences in relative prices across regions within the United States.  This type of inter-regional relative price adjustment is familiar to regular readers of the Arkansas Economist — in the context of interpreting poverty rates published by the Census Bureau (see, here and here, for example).  In recent years, researchers at the U.S. Bureau of Economic Analysis (BEA) have been developing statistics on regional price differences that can be applied more generally to income and consumption data for the states and metropolitan areas of the U.S.  This year, the BEA is scheduled to publish the first set of annual updates for personal income adjusted by regional price parties (RPPs).

The baseline estimates for these regional price parties were published in the Survey of Current Business in August 2012 — Regional Price Parities for States and Metropolitan Areas, 2006–2010.   Using data on rents from the American Community Survey (Census Bureau), price data from the Consumer Price Index (Bureau of Labor Statistics), and expenditure shares from the Personal Consumption Expenditure survey (BEA), the newly-developed RPP statistics allow for the comparison of the cost of living among states and metro areas in the U.S.

Normalizing the U.S. average to have an index value of 100, the estimate of Arkansas’ relative price level is calculated to be 89.3.  That is, the overall level of prices in Arkansas is more than 10% lower than the national average.  For the calculation period 2006-2010, the highest and lowers price parities in the nation were calculated for Hawaii (116.1) and South Dakota (87.2), respectively.  The Arkansas level of 89.3 ranked our state as having the 6th lowest prices in the nation.

This as in interesting finding in its own right, but is even more important in what it tells us about relative incomes and purchasing power.  For example it is widely known that Arkansas has one of the lowest levels of average income in the nation.  But to the extent that prices are also lower than in other regions, the differences in price-adjusted standards of living are less extreme than the unadjusted dollar-values suggest.  The map below, reproduced from the article in the Survey of Current Business, shows how per capita personal income changes after adjusting for regional price parities.  Arkansas is one of the states where the purchasing power of income is increased the most by the adjustment — specifically, price-adjusted per capita income for 2010 is 12.2% higher than unadjusted per capita income.

Source: Bureau of Economic Analysis

The average per capita income in all 50 states plus the District of Columbia was $39,900 in 2010.  By construction, this is also the price-parity-adjusted level of income for the U.S.  Without price adjustment, Arkansas’ per capita income was $32,800 — approximately 82.2% of the national average.  After adjusting for the relatively low cost of living in Arkansas, however, the RPP-adjusted income in Arkansas was the equivalent of $36,800 — about 92.2% of the U.S. average.  The table below summarizes this comparison and presents data on RPP-adjusted incomes for the eight metropolitan areas that include parts of Arkansas.

Source: Bureau of Economic Analysis

The RPP figures for Arkansas are all below the national average of 100, ranging from 82.8 in Jonesboro to 94.7 in the Memphis metro area.  In unadjusted dollar terms, per capita income in Arkansas metro areas range from 75.7% of the national average in Pine Bluff to 96.5% in Little Rock.  After adjusting for regional price parities, however, incomes in Pine Bluff rise to 86.2% of the national average and incomes in Little Rock are 3.5% higher than the national average.  In fact, after re-calculating incomes to account for their greater purchasing power, the RPP-adjusted measures of personal income are above the national average in three of the state’s metro areas.

The research on RPPs is still considered to be experimental, with economists at the BEA and elsewhere working to improve the quality of regional price data and the methodology for compiling them into regional index values.  The data will undoubtedly be refined and revised as research continues.  But the overall implications of the findings are clear:  after adjusting for a relatively low cost of living, incomes in Arkansas allow for a higher standard of living than in some of the higher-cost regions of the country.

 

Arkansas Employment and Unemployment – December 2012

By , January 18, 2013 11:24 AM

Data from the Bureau of Labor Statistics and Department of Workforce Services show the Arkansas unemployment rate ticked up by one-tenth of a percent in December to 7.1%.  The number of unemployed was essentially unchanged (+223), while the number of employed declined by over 8,700.  After falling by a full percentage point between July 2011 and April 2012, Arkansas’ unemployment rate appears to have plateued over the second half of 2012.  As of December, the rate remains 0.7% lower than the U.S. average.

Source: Bureau of Labor Statistics

The underlying components of the unemployment rate show a clear change in conditions over the second half of 2012.  Although the number of unemployed persons has generally continued to fall, the number of employed has also trended downward.  As a result, the labor force has contracted significantly.  The period from July 2011 to April 2012 was characterized by an expanding labor force and falling unemployment — a very favorable combination of trends.  Since April, however, the decline in the labor force has nearly erased all of the increase that had previously taken place after Arkansas labor markets began to recover at the beginning of 2010.

Source: Bureau of Labor Statistics

Payroll Employment:
Nonfarm payroll employment was also down in December, falling by 3,000 (seasonally adjusted).  Compared to the previous month, employment was down in Manufacturing, Financial Services, Education & Health Services, Leisure & Hospitality Services, and in each of the sub-sectors comprising Trade, Transportation & Utilities.  The only notable increases were in Professional & Business Services, Other Services, and Construction.  In the case of Construction, the not-seasonally-adjusted data actually showed a slight decrease — but it was a smaller decline than would typically be expected in December.  Over the course of the year, total payroll employment rose by 7,700 — a movement in the right direction, but too small to drive any significant progress toward full employment.

Source: Bureau of Labor Statistics

Today’s data release was the last scheduled until March 1st, when we’ll see newly-revised statistics.  Based on the underlying data from the Quarterly Census of Wages and Employment (QCEW), we expect that there will be some significant upward revisions to the Arkansas payroll statistics.  However, the revisions primarily affect the data for late 2011 and early 2012.  Hence, the revised payroll data are expected to be more consistent with the patterns we’ve seen in the data from the household survey — improving conditions up until the spring of 2012, but a stagnant labor market situation since then.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

 

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.

Metro Area Employment and Unemployment – November 2012

By , January 8, 2013 5:45 PM

New data on employment and unemployment in Arkansas’ metro areas generally show improvements in labor market conditions around the state.  This morning’s data release from the Bureau of Labor Statisics showed that unemployment rates in November were lower than a year ago in all eight of the metro areas that include parts of Arkansas.  The year-over-year declines range from -0.3 percentage points in Jonesboro to -1.4 percentage points in Memphis.

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

The not-seasonally-adjusted unemployment rates were down from the previous month in all metro areas — quite sharply in some cases.  However, recurring seasonal patterns drove a large proportion of the changes.  Even after seasonal adjustment, however, unemployment rates were down for the month in most of Arkansas metro areas.  Data from the BLS smoothed seasonally adjusted estimates showed particularly sharp declines in unemployment for Memphis (-0.4%) and Texarkana (-0.3%).  The seasonally adjusted estimates showed that rates were unchanged in Jonesboro, Little Rock, and Pine Bluff.

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

The chart below shows the path of seasonally-adjusted unemployment rates over the past three years.  Although some metro areas have seen temporary increases from month to month, the trend of lower rates has clearly prevailed since the latter part of 2011.

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

Payroll Data
Data from the survey of employers told a similarly upbeat story.  From October to November, employment increased in all metro areas except Little Rock. Monthly increases exceeded a full percentage point in Hot Springs, Jonesboro, and Pine Bluff. Compared to the previous November, employment was higher in Fayetteville, Jonesboro, Little Rock, Pine Bluff and Texarkana. Only Fort Smith, Hot Springs, and Memphis showed lower level of employment than a year earlier. The currently-published data show that all of Arkansas’ metro areas except Fort Smith have shown positive growth since the statewide employment trough-date of February 2010.  But only Fayetteville, Jonesboro and Texarkana show employment above pre-recession levels.

Sourse: Bureau of Labor Statistics (Current Employment Statistics)

Expected Data Revisions
The employment data in the table above summarizes currently-published data.  When the payroll data are revised and benchmarked against more reliable data, however, the situation is likely to look quite different.  In previous posts (here for example), we have reported that recent employment data for the state of Arkansas is likely to be revised up by over 13,500 jobs (about 1.2%).  The data revisions for metropolitan areas are subject to greater uncertainty, but the underlying data from the Quarterly Census of Employment and Wages suggest that some of the metro employment figures will be revised substantially.   As shown in the set of charts below, revisions will be particularly significant for Fort Smith, Jonesboro, and Texarkana.  In percentage terms, the largest revision (and arguably the most welcome) is expected to affect data for Fort Smith.  The new data will show that the currently published figures underestimate actual employment in Fort Smith by approximately 5,700 jobs, or 5.2%.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

With these expected revisions, the November employment situation looks somewhat different.  The most recent change (from October to November) will not be affected.  However, the year-over-year, change-since-trough and change-since-peak comparisons will be affected.  The table below summarizes the revised situation (compare to the table above of the same title).

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

Note that these are preliminary estimates calculated by the Institute for Economic Advancement.  The official benchmark revisions will not be published until March 2013.

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