Arkansas Economic Development Institute

Arkansas Employment and Unemployment – February 2013

By , March 29, 2013 12:30 PM

The Arkansas unemployment rate was in February was 7.2%, unchanged from the previous month.  New data from the Bureau of Labor Statistics and Department of Workforce Services showed that the number of unemployed declined by nearly 600, partly offsetting the January increase.  However, the February household survey also showed a sharp decline in employment for a second consecutive month.  The two-month decline in employment with little change in unemployment implies a sharp contraction of the labor force.  This was the for 13th consecutive monthly decline in the size of the labor force, with an apparent acceleration of the trend during the first two months of 2013.  Since January 2012, the labor force has fallen by more than 30,000 — about 2.2%.

Source: Bureau of Labor Statistics

Payroll Survey
Nonfarm payroll employment was up by 2,800 in February (seasonally adjusted*).  For the first two months of the year, payroll employment rose by only 600, and is essentially unchanged (+800) from October of 2012.  As detailed in the table below, employment was up for the month in each of the goods-producing sectors and in most of the service-providing sectors as well.  The only monthly declines were in Information Services, Financial Services, and Other Services.   Employment in most sectors has increased over the past year, and most have shown positive growth since the post-recession employment trough of February 2010.  Notable exceptions are Construction, Manufacturing, Information Services, and Other Services.  Overall, employment is up 31,000 since the February 2010, a recovery of approximately 54% of the jobs that were lost during the recession.

Source: Bureau of Labor Statistics

The overall employment trends indicated by the household survey and the payroll survey have been diverging in the first part of 2013.  As shown in the figure below, the two data sources rarely provide identical signals about short-term employment changes, yet they generally show similar trends. However, the sharp decline in household employment in January and February clearly contrasts with the relatively unchanged employment profile suggested by the payroll survey.  Ordinarily, economists tend to rely more on the payroll figures as providing a more complete and accurate assessment of labor market conditions.  But as we have recently seen, the payroll employment statistics are preliminary and subject to future revision.  As additional employment data are released in the coming weeks and months, we’ll be closely monitoring the relative performance of the household and payroll employment statistics, seeking to reconcile the conflicting signals they seem presently to be providing.

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:Q4

By , March 28, 2013 2:52 PM

Final figures are now available for Arkansas Taxable Sales (ATS) in 2012.  After two quarters of contraction, taxable sales rebounded sharply in the fourth quarter of the year.  Not including gasoline, ATS increased by 3.5% in the fourth quarter — a larger increase than had been indicated by preliminary data.   With gasoline prices down slightly in the fourth quarter, total gasoline sales increased by only 0.8%.  Consequently, the increase in Arkansas Taxable Sales Including Gasoline (ATSIG) was slightly smaller than ATS growth:  3.2%.  On a year-over-year basis, ATS and ATSIG were up 1.3% and 1.2%, respectively, in the fourth quarter.

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

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

The downturn in taxable sales during the second and third quarters of 2012 has been something of a mystery.  In particular, it seemed to be taking place against a backdrop of fairly steady economic growth suggested by other economic indicators.  However, recent data revisions to personal income and employment have provided corroborating evidence that economic activity slowed noticably in the third quarter.  The 2012 experieence shows how sales tax data can sometimes provide more accurate and timely information about the state of the Arkansas economy than the “official” data produced by Federal government agencies (which are often subject to considerable revision over time).

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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 2012:Q4 (Excel file)

Arkansas Personal Income – 2012:Q4

By , March 27, 2013 12:55 PM

The Bureau of Economic Analysis released new data on state personal income this morning.  In Arkansas, personal income rose by 2.2% for the quarter, compared to a 1.9% growth rate nationwide.  Arkansas’ growth rate for the quarter was the 12th highest in the nation.  Data for the third quarter were revised downward, but growth for the entire year remained relatively strong at 4.9% (Q4/Q4).

As shown in the figure below, personal incomes in Arkansas have risen to a level that is 9.3% higher than the previous cyclical peak (in 2008:Q2).  By comparison, U.S. personal income is 8.3% higher over the same period.  These figures do not include the effects of inflation, however.  After accounting for price increases of approximately 6.7% over the period (as measured by the price index for personal consumption expenditures), real personal income is up 2.4% in Arkansas and 1.9% for the U.S.

Source: Bureau of Economic Analysis

The press release noted particularly strong growth in the fourth quarter, citing special and accelerated dividend payments that were associated with end-of-year expectations for higher income tax rates in 2013.  The report also cited accelerated bonus payments and other irregular pay in anticipation of tax rate changes.  These effects had their largest impacts on states where the finance industry is particularly prominent.

The BEA report also noted the impact of severe heat and drought on agricultural production and income in the summer and fall of 2012.  Although the impact of these weather-related effects were fairly large and negative for states in the upper Midwest and great plains states, the impact on farm incomes in Arkansas was positive.  Record crop yields and high prices combined to boost Arkansas farm incomes by 44% over their levels in the fourth quarter of 2011.

The table below compares annual growth rates in total personal earnings for Arkansas and the U.S.  For the year in total, earnings growth was 2.6% in Arkansas, compared to 3.3% for the U.S.  Sectors generating large income gains included Farming, Utilities, and Management of companies.  Industries in which Arkansas earnings growth lagged the nation included Mining, Nondurable goods manufacturing, and Finance and Insurance.

Source: Bureau of Economic Analysis

With data now available for the year as a whole, today’s report also highlighted new measures of per-capita income in 2012.  Per capita personal income in Arkansas was estimated at $34,723 — about 81% of the national average ($42,693).  This ranked Arkansas #45 among the 50 states.  As noted in a previous post, the real purchasing power of incomes are affected by regional differences in the cost of living.  Updated estimates of regional price parities will come out later this summer (scheduled for June 12).  For now, using the 2006-2010 estimates of regional price differences, price-adjusted per capita income in Arkansas amounted to 91% of the national average in 2012, moving the state up to #41 in the rankings (not including D.C.)

Metro Area Unemployment & Employment – January 2013

By , March 22, 2013 11:53 AM

The Bureau of Labor Statistics (BLS) announced new data on metro area employment and unemployment this morning. The BLS news release noted that unemployment rates were lower in January 2013 than a year earlier in 227 of the nation’s 372 metropolitan areas.  Most of Arkansas’ Metropolitan Statistical Areas (MSAs) fall into this category, with the exception of Memphis and Pine Bluff.  The largest year-over-year declines were in Fayetteville (-0.4%), Jonesboro (-0.3%), and Texarkana (-0.3%).

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

A look at the month-to-month changes in unemployment rates around the state might appear as cause for alarm.  As shown in the table below, unemployment rates were up sharply, with increases ranging from +0.6% in Fort Smith to +1.5% in Pine Bluff and Texarkana.

However, the primary explanation for these large increases is seasonal variation.  With the end of the holiday shopping season, cold weather suppressing construction activity, and many public schools still on winter break, unemployment always rises in January.  Indeed, the not-seasonally-adjusted numbers for statewide unemployment show an increase of more than a full percentage point in January — in contrast to the +0.1% (seasonally adjusted) that was headlined earlier this week.

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

The figure below illustrates the annual seasonal pattern for statewide unemployment rates.  Seasonal patterns for metro areas often have distinctive characteristics, but generally follow a similar pattern.  On average, the unemployment rate rises from December to January by nearly a full percentage point — due solely to recurring seasonal factors.  Looking ahead, the good news is that seasonal factors typically drive the unemployment rate down by more than one-half of a percentage point in both March and April.

These recurring swings in unemployment are interesting illustration of the seasonal cycle, but they can get in the way of evaluating labor market conditions relative to the business cycle.  That is, if we are interested in evaluating the recovery of labor markets from the last recession, seasonal components can give misleading signals when comparing monthly changes in not-seasonally-adjusted data.

Sources: Bureau of Labor Statistics, author’s calculations

The value of seasonal adjustment is that it removes the seasonal component leaving only the cyclical component (ideally, at least).  Although national and state unemployment rates are routinely released in seasonally-adjusted form, the metro area data are not — at least not in the “headline” news release.  However, the BLS does publish Smoothed Seasonally Adjusted Estimates, which are summarized for Arkansas’ metro areas for January 2013 in the table below.

By these estimates, unemployment rates were higher in Memphis, Pine Bluff, and Texarkana — but only by two- to three-tenths of a percentage point.  Rates were unchanged in Hot Springs, Jonesboro, and Little Rock.  After seasonal adjustment, unemployment rates were actually down for the month in Fayetteville and Fort Smith.

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

These statistics are far from perfect, and one should never put too much emphasis on data for a single month.  Nevertheless, they provide better information on the cyclical state of labor markets in Arkansas (i.e., how they are recovering relative to the last recession) than the not-seasonally adjusted estimates.

Payroll Employment
The annual benchmark revisions to the metro area payroll employment statistics were described in a previous post.  The table below summarizes the newly-revised data for January 2013.  From December to January, payroll employment was up in Fayetteville, Fort Smith, Hot Springs and Jonesboro.  Declines were registered for Little Rock, Memphis, Pine Bluff, and Texarkana.

Compared to January 2011, employment is higher or essentially unchanged in all of Arkansas’ metro areas except Pine Bluff.  Pine Bluff is also the only metro area that has experienced an ongoing contraction since the statewide employment trough of February 2010.  With the newly-revised data, only Fayetteville and Jonesboro have employment levels higher than before the onset of the last recession (December 2007).

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

 

Revised Employment Data for Metro Areas

By , March 20, 2013 2:18 PM

The Bureau of Labor Statistics (BLS) won’t release its summary of metro area employment data until this Friday (March 22), but the annual revisions to payroll employment data have been available since the revised state-level data came out on Monday. The table below summarizes the magnitude of the data revisions and their impact on year-over-year growth rates for Arkansas’ metro areas.   The revised data result in higher measured levels of employment in most of the metro areas, with the only downward revisions being Pine Bluff and Texarkana.

Source: Bureau of Labor Statistics

In some cases, the level of 2012:Q4 employment was revised upward but the annual growth rate ended up lower.  Jonesboro is a prominent example.  The explanation for this phenomenon is that upward revisions to employment data for 2011:Q4 were even larger than the upward revisions for the end of 2012.  The set of figures below illustrates this pattern with particular clarity in the Jonesboro case.  Another interesting case is Fort Smith, which experienced the largest proportionate revision to the level of measured employment, but with little effect on its annual growth rate because the revision affected levels of employment for the entire year.

Source: Bureau of Labor Statistics

A comparison of the actual data revisions with the expected revisions previously posted on Arkansas Economist reveals some notable differences.  For example, the expectation was for Fayetteville to experience a downward revision, when the actual revision was positive.  Data for Little Rock were expected to show little change, but the actual revision was fairly substantial.  There are two explanations for these forecast errors.  First, the data for metro areas are fundamentally more volatile than the state level data, making them more difficult to predict.  Idiosyncratic local circumstances can contribute to sharp swings in the metro area data that end up being netted-out in state-level and national data.

More important, the BEA updated its methodology for benchmark revisions this year, incorporating more up-to-date readings from the Quarterly Census of Employment and Wages (QCEW).  In particular, the BLS used QCEW data through September 2013 for this year’s revisions.  Our “forecasted revision of history” would have been more accurate if we had used QCEW data for the second quarter, but we still would have missed the information from the third quarter data (which are not yet publicly available).  Although the updated methodology makes it more difficult to anticipate the nature and magnitude of upcoming data revisions, the good news is that the revised data are now more accurate and up-to-date than they have been in the past.  This should reduce the impact of future benchmark revisions, making the annual benchmarking process less significant in evaluating recent trends.

Arkansas Employment and Unemployment – Jan 2013 and Revisions

By , March 18, 2013 1:29 PM

New and revised data for state employment and unemployment were released today by the Bureau of Labor Statistics and Department of Workforce Services.

For January, the household survey (a.k.a. Local Area Unemployment Statistics) featured an uptick in the unemployment rate to 7.2% (up from December’s 7.1% rate).  The number of people employed was down by 4,055 while the number employed increased by 760.  Consequently, the labor force declined by nearly 3,300.  The unemployment statistics were recently revised, reducing the magnitude of some recent fluctuations in Arkansas’ unemployment rate.  The revised data show that the rate peaked at 8.0% (instead of 8.2%), and the decline from July 2011 through April 2012 amounted to only 0.7% (instead of 1.0%).  The rate for December 2012 was unrevised at 7.1%.  The uptick in January’s unemployment rate mirrors the 0.1% increase that was previously reported for the U.S. average.

Source: Bureau of Labor Statistics

Payroll Survey:
The not-seasonally adjusted data for nonfarm payroll employment showed a decline of 20,800 jobs from December to January.  However, payroll employment is subject to particularly large seasonal effects in January:  the holiday break in public schools lowers employment in state and local government sectors, the end of the holiday shopping season reduces retail employment, and construction activity tends to scale back during the winter months.  After seasonal adjustment*, nonfarm payroll employment declined by only 1,700 for the month.

The employment contraction was smaller after seasonal adjustment, but it was still a decline.  Even considering seasonal patterns, construction employment was down 2,300.  Notable declines were also reported for Wholesale Trade, Transportation & Utilities, Professional & Business Services, and Government.

Source: Bureau of Labor Statistics

Benchmark Revisions:
The release of the January report was delayed by the annual “Benchmark Revision” process for payroll employment data.  The benchmarking involves a re-calibration of the monthly payroll employment series to be consistent with the more detailed Quarterly Census of Employment and Wages (QCEW).  We had expected the benchmarking process to result in a significant upward revision in the Arkansas payroll data, and it did.  The revisions to data for 2011 were particularly large.  For the period July through December 2011, the average monthly revision was +17,300.  This year, the BLS extended the period subject to benchmark revision to include the second and third quarters of 2012.  This resulted in lower job growth during 2012 than previously reported, but the increases in 2011 left the level of employment substantially higher than the earlier data had suggested.  In addition to the benchmark revision itself, the data were also subject to revised seasonal factors.

In total, the revisions amounted to an increase in payroll employment of 11,900 more than previously estimated for December 2012.     The newly revised data now show that Arkansas payroll employment expanded by 28,700 from February 2010 through January 2013 — a recovery of approximately one-half of the total job losses experienced during the employment contraction of December 2007 through February 2010 (see table above).

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.

Arkansas Population Estimates for 2012

By , March 14, 2013 1:51 PM

The U.S. Census Bureau released new population estimates today.  The statistics for Arkansas contain no real surprises:  Population growth patterns continued along well-established trends.  Among Arkansas’ 75 counties, only 25 experienced positive population growth between the April 2000 Census and July 2012.  The fastest growing counties over the past two years were the suburban areas of the state’s largest metropolitan areas.  Benton County in Northwest Arkansas had the highest growth (4.9%), followed by Faulkner County in Central Arkansas (4.8%).  The top four also included Saline County and Washington County.  Other areas of relatively rapid growth included parts of Northeast Arkansas (Craighead and Green Counties), as well as some counties in the North-Central part of the state. Overall, the state’s population increased by 1.1%.

[For a full-page PDF file of the map, click HERE.]

January Home Sales Up 11.6%

By , March 8, 2013 4:19 PM

The Arkansas Realtors® Association (ARA) announced yesterday that January home sales were up 11.6% from the previous year.  After several months of some slow sales growth, the January figures would seem to indicate some improvement in Arkansas residential real estate markets.  However, there are good reasons to avoid being overly enthusiastic about the report.

First, as illustrated in the chart below, January tends to be the slowest sales month of the year.  Although the January 2013 sales total of 1,448 is the highest January total since 2008, total sales in 2013 will depend far more crucially on the sales figures in the peak summer months.  Weak sales in the summer would completely swamp the sales gains from January.

Source: Arkansas Realtors® Association

A second reason to be cautious in interpreting the January sales figures is the volatile nature of month-to-month fluctuations in home sales.  The ARA had previously reported that sales in November 2012 were up 6.6% from the previous year but that December sales were down 6.2%.  The January increase should be interpreted in light of this pattern of zig-zags.  Moreover, severe weather in the final week of 2012 might have distorted the statistics for both December and January.  The ARA sales statistics refer to home-sale closings.  With much of the state paralyzed by ice and snow snow, and with many homes and businesses lacking electricity, it is quite possible that some final inspections and closings were delayed until after the start of the new year.  This would help to explain both the downturn in the December sales figures and the sharp increase in January.  If we consider the two-month period of December 2012/January 2013, total sales were up only 1.3% from the same time a year earlier.

Nevertheless, there is reason to be cautiously optimistic about the outlook for home sales in 2013. Financing rates remain at all-time lows, home prices have appear to have bottomed-out, and general economic conditions continue to improve.  Although the sales trend has been flat for the past two years, seasonally-adjusted data shown in the figure below gives some indication of a slight upturn in recent months.  The pace of sales growth in the upcoming spring months should give a better indication of whether this apparent upturn represents a lasting improvement.

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

 

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