A forum for information and analysis on the Arkansas economy
Arkansas Employment and Unemployment – October 2023
The state employment report for October reinforces suggestions of a slight weakening of labor market conditions that were indicated by the data of the past two months. The unemployment rate increased for the third consecutive month, while employment surveys showed declines for the month.
The headline measure, the unemployment rate, rose by 0.2 percentage points to 3.1% in October. The national unemployment rate was previously reported as increasing 0.1 percentage points to 3.9% in October. Despite a slight narrowing of the gap between the two, Arkansas’ rate remains significantly lower (in a statistical sense) than the U.S. rate.
Source: Bureau of Labor Statistics
Although the Arkansas unemployment rate is one-half of a percentage point higher than in June and July, a rate of 3.1% matches the record-low prior to 2023. Similarly, the number of unemployed, which rose by 2,616 to 42,549 in October, remains lower than at any time prior to this year.
The October report also showed a decline in employment (-1,813) following two months of slow growth. The combination of the increase in the number of unemployed and decline in the number of employed resulted in a net increase in the labor force, continuing its upward trend and setting a new all-time high.
Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)
Payroll Employment
Nonfarm payroll employment declined by 3,500 in October, following a decline of 3,700 (revised) in September (seasonally adjusted data). The two months of decline offset some of the gains from the summer months, but total payroll employment remains higher than it was at the beginning of the year. Compared to October 2022, employment is up by 12,800 jobs.
The downturn in October was broad-based, with lower employment in several good-producing and service providing sectors. One notable exception was Construction employment, which increased by 800, and is up 7,700 compared to a year ago. Government employment was also higher in October, up by 600 compared to the previous month and up 1,400 from a year ago. Several service sectors that had been showing strong growth showed downturns in October, including Professional & Business, Education & Health, and Leisure & Hospitality services.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
The net gain of 12,800 jobs over the past twelve months translates to a growth rate of 0.9%. Over the same period, U.S. payroll employment is up by 1.9%. Since the onset of the pandemic in February 2020, Arkansas employment is up by 5.2%, while the U.S. net increase is 3.0%.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
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Seasonally adjusted data for Arkansas nonfarm payroll employment, reported in a format consistent with the monthly news release from the Arkansas Division of Workforce Services, can be found here: Table-Seasonally Adjusted NFPE.
2023 Economic Forecast Event
This morning’s Economic Forecast Event was a great success. Thank you to all the participants and attendees, and special thanks to the Little Rock Branch of the Federal Reserve Bank of St. Louis for hosting the event.
Copies of the presentations are available by following the links below:
- Kathleen Navin: National and Regional Economic Conditions
- Michael Pakko: The Arkansas Economic Outlook
- Clint O’Neil: Arkansas Economic Forecast Event
Metro Area Employment and Unemployment – September 2023
Mirroring the statewide report, Arkansas’ metro areas saw unemployment creep higher, with signs of slowing employment growth in some areas.
Among the eight metro areas that cover parts of the state, only Texarkana saw no change in its unemployment rate. The unemployment rates in Northwest Arkansas, Hot Springs, Little Rock and Memphis were up 0.1 percentage points, while Fort Smith, Jonesboro and Pine Bluff matched the 0.2 percentage point increase reported for the state in September. Along with increases in August, unemployment rates have risen noticeably over the past two months, but generally remain lower than a year ago.
Notably, the patterns for metro areas that are primarily based in Arkansas show a similar pattern: A sharp decline in unemployment during the first half of the year, and a rebound in the past two-to-three months. This pattern is not evident in the data for Memphis and Texarkana, suggesting that the state-specific component for Arkansas is driving the results. In our analysis of the statewide report for September, we conjectured that the 2023 dip in Arkansas unemployment—not present in the national data—might be a data anomaly that will be smoothed after the annual revisions in January. The patterns seen in the metro area data reinforce that suspicion.
Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Statistics
Unemployment rates in Fayetteville, Jonesboro and Little Rock remain lower than the statewide average of 2.9%, while rates in Memphis, Pine Bluff and Texarkana are above the national rate of 3.8%. Fort Smith and Hot Springs occupy a space in-between the state and national rates.
Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Statistics
Payroll Employment
Nonfarm payroll employment declined from August to September in Jonesboro, Fort Smith and Little Rock. On the other hand, the data show strong job growth in Northwest Arkansas, Hot Springs, Memphis and Texarkana. With a surge over the past three months, employment in Texarkana is now 3.1% higher than a year ago—a growth rate nearly as high as the 3.4% growth in the Fayetteville-Springdale-Rogers MSA. Jonesboro and Pine Bluff have also shown significant growth over the past 12 months, while Hot Springs, Little Rock and Memphis are essentially unchanged from a year ago.
Source: Bureau of Labor Statistics, Current Employment Statistics
The longer-term growth trends continue to indicate that the strongest job growth is in the northeast and northwest areas of the state, with Fayetteville-Springdale-Rogers expanding by 13% since February 2020, followed by Jonesboro with 6.7% growth. Little Rock and Hot Springs have also grown significantly relative to pre-pandemic employment levels. Pine Bluff is the only metro area in the state where employment remains below the February 2020 benchmark.
Source:
Arkansas Employment and Unemployment – September 2023
The September report on employment and unemployment in Arkansas suggests a slight weakening of labor market conditions. The unemployment rate increased by 0.2 percentage points, from 2.7% in August to 2.9% in September. The national unemployment rate was 3.8% in September. The difference between the U.S. and Arkansas unemployment rates remains statistically significant. Despite September’s increase, the Arkansas unemployment rate below 3% remains exceptionally low.
Source: Bureau of Labor Statistics
The increase in the unemployment rate was attributable to the second month of increase in the number of unemployed. The number of unemployed was up 2,561 in September after increasing 1,715 (revised) in August. Despite these increases, the number of unemployed remains below 40,000 and the unemployment rate lower than 3% should be considered a sign of ongoing tightness of labor markets. The number of employed continued its long span of expansion, albeit at a slower pace over the past two months. The labor force continues to grow.
Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)
Payroll Employment
Nonfarm payroll employment declined by 3,300 jobs in September (seasonally adjusted). Declining sectors included Durable Goods Manufacturing and Retail Trade. Employment Leisure and Hospitality Services declined in September as well, but remains well-above year-ago levels. Sectors adding jobs in September included Construction and Professional and Business Services.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
Over the past 12 months, nearly 20,000 jobs have been added to the Arkansas economy (a growth rate of 1.5%). Much of the growth has been concentrated in a few sectors, including Construction, Education & Health Services, and Leisure & Hospitality Services.
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Seasonally adjusted data for Arkansas nonfarm payroll employment, reported in a format consistent with the monthly news release from the Arkansas Division of Workforce Services, can be found here: Table-Seasonally Adjusted NFPE.
Arkansas Personal Income – 2023:Q2
The most recent personal income report showed a sharp slowing of Arkansas income growth in the second quarter. However, thorough revisions to the data had the effect of raising estimates of the state’s growth in the recent past, particularly in 2020 and 2021.
For the second quarter, Arkansas Personal Income growth rate was only 0.4% at a seasonally-adjusted annual rate, compared to a 4.3% growth rate for the U.S. Arkansas growth rate was the slowest positive growth rate in the nation, with Maine showing a decline of 2.7%.
Arkansas slow growth in the second quarter was primarily attributable to Farm Income, which dropped by 7.4% for the quarter, a decline of 97.8% at an annualized rate. This followed a (revised) sharp decline in the first quarter as well. The impact on total proprietors’ income is illustrated in the figure below.
Source: Bureau of Economic Analysis
Note that the decline in Farm income had the effect of lowering total proprietors’ income, even though Non-farm proprietors’ income increased at a 4.3% annual rate. This followed a (revised) sharp decline in farm income in the first quarter as well.
As shown in the table below, Proprietors’ income was the sole factor for slow earnings growth. Wages & Salaries, and Dividends, Interest & Rent were positive contributing factors to personal income growth.
Source: Bureau of Economic Analysis
A breakdown of industry contributions to earnings and personal income growth again highlights the prominence of farm income in this quarter’s report. Nearly all other sectors showed positive growth or only small declines. Were it not for the -3.3 percentage point contribution of Farm earnings, personal income would have increased at the same rate as the U.S. total.
Source: Bureau of Economic Analysis
Data Revisions
Comprehensive revisions to the Personal Income data had significant implications for income growth over the past several years. The revised statistics show slower growth in 2019, but higher growth rates during 2021 and 2022.
Source: Bureau of Economic Analysis
The slower growth in 2019 is reflected in downward revisions to Dividends, Interest and Rent, as well as Proprietors Income. As shown in the two figures below, however, Revisions of more recent data for these two categories diverge, however. The new data show more rapid post-2020 growth for Dividends, Interest, & Rent, while Proprietors Income was revised sharply lower (both Farm and Nonfarm were revised lower).
Source: Bureau of Economic Analysis
The upward revisions to personal income growth during the pandemic were primarily attributable to higher estimates of Current Personal Transfer Receipts:
Source: Bureau of Economic Analysis
The revisions had little impact on the main source of earnings: Wages and Salaries.
Overall, the revisions leave Arkansas in a position with larger cumulative income gains since 2019 than the rest of the nation. The most recent quarter added little to total growth, but compared to 2019:Q4 Arkansas income has increased by 25.8%. Over the same period, U.S. cumulative income growth has been 23.1%.
Source: Bureau of Economic Analysis
Metro Area Employment and Unemployment – August 2023
Unemployment rates in Arkansas metropolitan areas ticked slightly higher in August, following the statewide uptick of 0.1 percentage points to 2.7%. Rates in Hot Springs, Jonesboro, Little Rock and Pint Bluff matched the statewide increase and Fort Smith increased by 0.2 percentage points. Rates in Northwest Arkansas, Memphis and Texarkana were unchanged for the month.
Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Estimates
After declining through the first half of 2023, the upticks in August (and in July for Fort Smith and Memphis), leave unemployment rates below year-ago readings in all metro areas, with the year-over-year declines ranging from 1.4 percentage points in Pine Bluff to 0.2 percentage points in Memphis.
As of August, unemployment rates were lower than the statewide average in the Fayetteville-Springdale-Rogers, Jonesboro and Little Rock-North Little Rock-Conway metro areas. Rates in Fort Smith and Hot Springs are above the statewide average, but below the national unemployment rate. In Memphis, Pine Bluff, and Texarkana, unemployment rates are near the national reading.
Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Estimates
Payroll Employment
Changes in Nonfarm payroll employment were mixed in August. Payrolls expanded by 0.8% in Northwest Arkansas, with Fort Smith, Jonesboro and Pine Bluff also seeing notable growth. Employment was down in Hot Springs, Little Rock, Memphis and Texarkana.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
Payroll growth over the past year has been very strong in Northwest Arkansas, Jonesboro, and Texarkana. Hot Springs and Memphis have experienced slight declines, while employment in Little Rock is unchanged relative to August 2022. With the exceptions of Pine Bluff and Texarkana, employment is generally much higher now than it was before the onset of the COVID-19 Pandemic.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
Arkansas Employment & Unemployment – August 2023
Arkansas unemployment rate increased slightly in August, rising by 0.1 percentage points to 2.7%. The national unemployment rate increased by 0.3 percentage points to 3.8% in August. The increases, particularly for the state, are not yet indicating a change in the underlying trends: with the unemployment rate still lower than 3%, a one-month uptick should not be of great concern.
Source: Bureau of Labor Statistics
The decline in the unemployment rate below 3% in Arkansas has been driven by a sharp drop in the number of unemployed since late 2022. The uptick in the August unemployment rate was similarly associated with an uptick in the number of unemployed. Meanwhile, household employment and the labor force have been expanding steadily throughout 2023.
Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)
The sharp decline in the number of employed in recent months is remarkable. When the time comes for annual data revisions at the beginning of next year, we would not be surprised to see the declining unemployment to be largely revised away, along with the sub-3% readings on the unemployment rate. The figure below compares indexes of the number of unemployed for Arkansas and the U.S. In the second half of 2022 both are near 100, indicating roughly the same number of unemployed as in 2019. Since the start of 2023, the Arkansas index dropped by nearly 25% before bouncing up slightly in August. Although it took place over a number of months, this is the type of sharp deviation that is often affected by the annual data revisions. Nevertheless, we wouldn’t expect any revisions to change the general trajectory of sustained very-low unemployment.
Source: Bureau of Labor Statistics
Payroll Employment
Nonfarm payroll employment expanded by 4,200 in August (seasonally adjusted), the fifth consecutive monthly increase. Over the past twelve months, payrolls have expanded by 26,700 representing a 2.0% growth rate that matches the national average. Relative to February 2020, Arkansas employment is up by 5.7%, compared to 2.7% for the U.S.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
The August increase in payroll employment was mostly concentrated in the service-providing sectors. Construction employment continued to expand, but manufacturing (especially durable goods) was down for the month. Employment in retail trade dropped significantly, and financial services employment was down slightly. Other service-providing sectors saw increases—particularly Leisure and Hospitality Services, which continues to provide a significant share of job growth over the past year.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
JOLTS Data for July
This was one of the unusual months when the state-level data for Job Openings and Labor Turnover Survey (JOLTS) are released on the same day as the state employment report (albeit with a one-month data lag). Although both the state and national national data show some signs of labor markets softening, conditions in Arkansas appear to remain strong. For example, the Quits Rate—which has been taken as an indicator of the “great resignation”—has been trending downward in 2023, but the Arkansas rate remains well-above the national rate.
Source: Bureau of Labor Statistics, Job Openings and Labor Turnover Survey (JOLTS)
One popular measure of the tightness of labor markets is the number of job openings per unemployed person. As shown in the chart below, the national ratio has trended downward from 2.0 in early 2022 to only 1.5 in July. Arkansas, on the other hand, has seen a surge in 2023, reaching a peak of 2.7 job openings per unemployed person in May. The July reading is 2.3.
Source: Bureau of Labor Statistics, Job Openings and Labor Turnover Survey (JOLTS)
The Job-openings/Unemployed ratio might overstate the worker shortage for Arkansas. The measure depends not only on the number of job openings, but also on the number of unemployed. As suggested above, the extremely low reported number of unemployed in Arkansas is somewhat suspect, so the surge in the Job Openings ratio might be overstated. To see this, consider a more general measure, the Job Openings Rate (which is expressed as a fraction of total employment plus job openings). By this measure, job openings in Arkansas remain plentiful in Arkansas, but not by as much as when the number of unemployed is used as a denominator.
Source: Bureau of Labor Statistics, Job Openings and Labor Turnover Survey (JOLTS)
Although the data for both the U.S. and Arkansas show some signs of a softening labor market conditions, there are no unexpected or surprising developments that suggest more serious weakening in the near future.
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Seasonally adjusted data for Arkansas nonfarm payroll employment, reported in a format consistent with the monthly news release from the Arkansas Division of Workforce Services, can be found here: Table-Seasonally Adjusted NFPE.
Arkansas Employment and Unemployment – July 2023
The latest state-level report on employment and unemployment shows that recent trends in Arkansas labor markets continue. Although the unemployment rate was unchanged at 2.6% the number of unemployed declined for the ninth consecutive month, reaching a new all-time low. Payroll employment growth slowed slightly on a month-to-month basis, but continues to trend higher at a healthy rate.
Recent declines in the number of unemployed have been the primary force driving the unemployment rate lower, but labor force participation and employment are also on rising trends.
Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)
Payroll Employment
Arkansas Nonfarm payroll employment increased by 800 jobs in July, a slightly slower pace than in recent months, but an increase nonetheless (seasonally adjusted data). Professional & Business Services led the way, increasing by 900. Only the Administrative & Support Services sub-component of that sector was down from the previous month. Leisure & Hospitality services continued on a strong post-covid recovery path (+400). Several sectors were down slightly, including Construction, Manufacturing (Nondurables), Retail Trade, and Transportation & Utilities. Among the other service sectors, both Health and Education components were slightly lower than in June.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
Compared to a year ago, payroll employment is up by 27,600 jobs, or about 2.1% — a growth rate consistent with the most robust of economic expansions, and that is consistent with the national growth rate of 2.2%.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
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Seasonally adjusted data for Arkansas nonfarm payroll employment, reported in a format consistent with the monthly news release from the Arkansas Division of Workforce Services, can be found here: Table-Seasonally Adjusted NFPE.
Arkansas Employment and Unemployment – June 2023
The latest state employment report shows another month of solid growth. The unemployment rate dropped to a new all-time record of 2.6%—a new record low for the series (again). The national unemployment rate also declined in June, leaving Arkansas’ unemployment rate a full percentage point lower than the U.S. average.
Source: Bureau of Labor Statistics
The unemployment rate is primarily being driven downward by historic low figures for the number of unemployed. After nine months of consecutive declines, the number of unemployed Arkansans dropped to less than 36,000 in June. Prior to the Covid contraction, that measure had never before fallen below 46,000. Meanwhile, household employment continues to climb: after nine consecutive months of growth, employment has increased by over 21,000 (1.6%). As a result, labor force participation also continues to climb.
Source: Bureau of Labor Statistics, Local Area Unemployment Statistics (LAUS)
Payroll Employment
Data from the payroll survey also showed ongoing strong employment growth. Nonfarm payroll employment expanded by 1,900 in June (seasonally adjusted data). Compared to a year earlier, payroll employment was up by 36,700 jobs (2.8%).
The increase from May to June included an increase in employment in Education & Health Services of 3,500 jobs, with most of the gains coming from Health Care and Social Assistance. At the other end of the spectrum, employment in Professional and Business Services was down by 2,600 jobs, with declines in each of the subcomponents of that super-sector. Changes in other service-providing sectors were mixed. In goods-producing sectors, we saw gains in Construction and Durable-goods manufacturing.
Source: Bureau of Labor Statistics, Current Employment Statistics (CES)
Compared to June 2022, payroll employment is up 36,700, with Education & Health Services and Leisure & Hospitality Services accounting for most of that growth. Those were two of the sectors hardest-hit with employment losses during the Covid contraction.
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Seasonally adjusted data for Arkansas nonfarm payroll employment, reported in a format consistent with the monthly news release from the Arkansas Division of Workforce Services, can be found here: Table-Seasonally Adjusted NFPE.
Arkansas Personal Income and GDP
New reports on personal income and GDP for the first quarter show signs of relative weakening of the Arkansas economy.
Personal income increased at a 3.2% annual rate in the first quarter, well below the national growth rate of 5.1%. (Personal income figures are not adjusted for inflation.) Arkansas growth rate ranked among the lowest in the nation, ranking 45th among the 50 states. The report from the Bureau of Economic Analysis showed reported that “Nationally, Nationally, earnings, property income (dividends, interest, and rent), and transfer receipts all contributed to the increase in personal income.” However, the growth rate of net earnings was only 0.1% in Arkansas, the lowest growth rate in the nation.
Source: Bureau of Economic Analysis
Among the components of earnings, wages and salaries increased at a 4.6% rate, outpacing the nationwide growth rate of 2.4%. However, proprietors’ income declined at an annualized rate of 21.8%.
Source: Bureau of Economic Analysis
The decline in proprietors’ income was, in turn, entirely attributable to farm proprietors’ income. In fact, total farm income declined at a rate of 54.1%. Rising farm income had been a contributing factor to higher growth rates in 2022, so although the decline in the first quarter is disappointing, farm income remains a positive contribution to total earnings.
Source: Bureau of Economic Analysis
Quarterly growth rates of personal income can vary significantly without necessarily indicating a change in trend. If we consider the longer-term performance of income growth in Arkansas, the first-quarter results are disappointing but they do not suggest an imminent downturn. In fact, the growth rate of total personal income over the past four quarters has been 6.2% in Arkansas and 5.1% for the U.S.
Source: Bureau of Economic Analysis
State GDP
Figures for Arkansas GDP showed similar relative weakness. Real GDP growth in the first quarter came in at an annualized growth rate of only 0.2%, compared to a nationwide growth rate of 2.0% (inflation-adjusted). Arkansas’ growth rate was among the lowest in the nation, with only Rhode Island showing slower growth (0.1%).
Source: Bureau of Economic Analysis
As we saw in the case of personal income, much of the first quarter slowdown in GDP was attributable to farm sector. In contrast to a positive contribution to the national growth rate, the contribution of Agriculture, forestry, fishing, and hunting was to subtract 0.6% from GDP growth in Arkansas. Other factors subtracting from growth included Manufacturing, Finance and insurance, and Real estate. In contrast, significant positive contributions were recorded for Construction, Wholesale and Retail trade, as well as Accommodation and food services.
Source: Bureau of Economic Analysis
As is the case for personal income, the first quarter performance of Arkansas GDP is disappointing, but does not necessarily indicate a significant change in trend. Over the longer term, Arkansas growth has been relatively strong. Since the fourth quarter of 2019, cumulative growth has totaled 7.8% in Arkansas, compared to 5.6% for the U.S.
Source: Bureau of Economic Analysis
The next release of GDP and Personal Income data will be in September, which will include annual revisions to the data.
Arkansas Economic Forecast Conference – Nov. 9th, 2023
Please join the Little Rock Branch of the Federal Reserve Bank of St. Louis, in partnership with the Arkansas Economic Development Institute, for the 2023 Arkansas Economic Forecast Conference.
Date: Thurs., Nov. 9, 2023
Time: 7:30 – 9:30 a.m.
Click Here for More Information
