Skip to content

Unemployment Rate Revisions

Next week we’ll see the results of the long-awaited benchmark revisions to payroll employment data for Arkansas.  In the meantime, the Bureau of Labor Statistics (BLS) has completed its annual revision of the Local Area Unemployment Statistics (LAUS).  Data for the LAUS are based on the same concepts and definitions as the national unemployment rate figures, but are calculated using statistical models that incorporate information from a number of sources.  Each year, the BLS revises labor force and unemployment data to incorporate updated population data, other data revisions, and reestimation of statistical models.

The revised figures for Arkansas’ unemployment rate show a slightly different pattern than did the previously-published data.  As shown in the figure below, the revised data show that the unemployment rate was higher than previously published from mid-2010 through mid-2011.  On the other hand, the unemployment-rate surge that we saw in the latter part of 2011 has been largely revised away.  For the month of December 2011, the new data show the rate at 7.8% — slightly higher than the 7.7% that was previously reported.

Source: Bureau of Labor Statistics

Metro Area Unemployment Rates

During 2011, the BLS began publishing smoothed seasonally-adjusted metropolitan area estimates for labor force and unemployment data.  The smoothed seasonally adjusted (SSA) estimates are processed using an algorithm that incorporates a long-run trend smoothing procedure.  Hence, the estimates show less month-to-month variability than data that is subjected to more conventional seasonal-adjustment techniques.  Beginning with the next Metropolitan Area Employment and Unemployment news release, the Arkansas Economist will begin publishing these estimates instead of the figures calculated in-house by the Institute for Economic Advancement.

Comparing the chart below to the most recent analysis of metro area unemployment rates, the overall pattern of unemployment-rate movements is basically the same but with somewhat lower volatility.  Because the smoothing procedure reduces the magnitude of month-to-month changes, the SSA data ended the year showing higher unemployment-rate levels than a simple seasonal adjustment technique. (That is, some of the rapid decline in unemployment rates that occurred in the last three months of the year is treated as transitory by the smoothing algorithm.)  The SSA data make for less dramatic headlines — rather, they provide a more measured evaluation of changes in metro area unemployment rates over time.

Source: Bureau of Labor Statistics

 

 

January Home Sales

The latest data on Arkansas home sales were released by the Arkansas Realtors® Association (ARA) today.  January is typically the slowest sales month of the year, so it is particularly difficult to interpret January sales data in the context of longer-term trends.  As shown in the figure below, home sales for the month were down slightly from 2011 (-1.1%).  However, sales in January 2011 did not fall as sharply as usual for the month.

Source: Arkansas Realtors® Association

Seasonally adjusting the data removes the recurring annual pattern from the series.  As shown below, seasonally-adjusted data for January 2012 are in line with observations from recent months.  If sales trends continue at their recent pace, 2012 home sales are expected to average just over 2000 homes per month.  As illustrated by the not-seasonally-adjusted data, however, most of the sales for the year are expected to take place in the summer months.

Source: Arkansas Realtors® Association, seasonally adjusted by the Institute for Economic Advancement

FDIC Banking Data – 2011:Q4

End-of-year banking data released by the FDIC yesterday showed that Arkansas banks generally continue to do better than the national average.  As covered in the Democrat-Gazette and The City Wire (here and here), the main story of the year in Arkansas banking was a decline in nonperforming loans and net charge-offs.   As shown in the figure below, the share of loans and leases classified as non-current at all Arkansas banks had been rising up through the second quarter of 2011, but declined in the second half of the year.

Source: FDIC

The high level of non-current loans in early 2011 is somewhat misleading.  Many of the assets acquired by Arkansas banks in the process of absorbing troubled out-of-state institutions are carried on the books as non-performing, even though arrangements with the FDIC partially indemnify the losses associated with the takeovers.  As shown in the second chart, below, the ratio of net charge-offs to loans and leases fell sharply in 2011, reflecting the reduced need to set aside funds to cover actual booked losses.

Source: FDIC

With troubled assets becoming somewhat less problematic, Arkansas banks reported improved profitability for the year.  As shown in the next chart, Arkansas banks managed to earn positive returns throughout the recession, even as the nation’s banks showed average losses in 2009.  In 2011, the rate of return on assets for Arkansas banks moved above the benchmark 1.0% rate, continuing to outpace the national average.

Source: FDIC

Many individual institutions in Arkansas continue to experience problems [see, for example, this analysis in The City Wire].  Nevertheless, even the proportion of Arkansas banks experiencing net losses is lower than the corresponding nationwide proportion.  At the end of 2009, nearly one-third of the nations banks were unprofitable, while the proportion of Arkansas banks with negative profits was less than 20%.  By the end of 2011, the share of unprofitable institutions nationwide had fallen to just over 15%, with the share in Arkansas falling to nearly 10%.

Source: FDIC

Arkansas House Prices – 2011:Q4

New data from the Federal Housing Finance Agency show Arkansas house prices rising over the second half of 2011.  The statewide average “All-Transactions Index” increased 0.3% in the fourth quarter, following a revised 0.8% gain in the third quarter.  Comparable data for the U.S. showed a similar rebound in the second half, up 0.4% in the fourth quarter following a 1.0% increase in the third quarter.  Arkansas home prices are still down 0.7% from the end of 2010, but evidence is accumulating that the trend of declining prices has abated.

Source: Federal Housing Finance Agency

Of course, house prices in different areas of the state do not move in unison.  Fourth quarter changes in the FHFA indexes were mixed among the state’s metropolitan areas.

  • In the two metropolitan areas where prices have fallen the most over the past five years — Fayetteville-Springdale-Rogers and Memphis — fourth quarter data showed slight declines, but not enough to offset the increases of the previous quarter.
  • Prices in Texarkana also fell slightly, but the longer-term trend remains distinctly positive.
  • Hot Springs has seen rather dramatic price declines since the end of the recession, but had experienced rapid price increase over the previous three years.
  • In Pine Bluff, prices were up sharply in the fourth quarter, but not enough to erase price declines registered in 2010.
  • Prices in Fort Smith have risen slightly in the second half of 2011, and appear to have stabilized since the beginning of 2010.
  • Stability has characterized house prices in Central Arkansas.  On net, prices in the Little Rock-North Little Rock-Conway metro area have changed little since 2007, when prices in other areas of the nation began to decline.
  • Home prices in Jonesboro never did experience any substantial price declines.  Beyond some temporary ups and downs, prices have continued to rise steadily.
Source: Federal Housing Finance Agency

Although Arkansas house prices appear to have stabilized toward the end of 2011, downward price pressures remain.  In particular, ongoing foreclosure activity and other sales of “distressed” properties tend to drive average prices lower.  This is more likely to be a factor in areas of the state where general economic conditions remain weak.  Nevertheless, the fact that mortgage delinquency rates and foreclosure activity are lower in Arkansas than elsewhere in the nation bodes well for the outlook.

Home Foreclosures in Arkansas

Last week, the data and analytics firm CoreLogic released home foreclosure data for December 2011.  The figures show that Arkansas homeowners continue to fare better than the national average.  The percent of homeowners who were more than 90 days late on their mortgage payments (including those in foreclosure) was 7.3% nationwide.  In Arkansas the comparable figure was 5.2%.  Among the 50 states, Arkansas was ranked #31 on this particular statistic.

Source: CoreLogic

Relatively speaking, Arkansas fared even better on foreclosure inventories.  Across the nation, 3.4% of all homes with a mortgage were classified as being at some stage of the foreclosure process in December.  In Arkansas, only 1.4% of all homes with mortgages fell into this category.  Only 6 states had a lower inventory rate.

Compared to a year earlier, Arkansas’ foreclosure inventory was down 0.4%.  This was twice the size of the decline registered for the nation.

The CoreLogic press release quoted chief economist Mark Fleming as noting “the inventory of foreclosed properties has begun to shrink, and the pace at which properties are entering foreclosure is slowing.”  This is clearly good news, and Arkansas continues to fare better than many other parts of the country.

Arkansas Taxable Sales – 2011:Q4 (Preliminary)

Preliminary data show that Arkansas Taxable Sales Including Gasoline (ATSIG) rose by 1.8% in the fourth quarter of 2011, and were up 5.1% from the previous year.  Excluding gasoline, Arkansas Taxable Sales (ATS) were up 1.9% in the fourth quarter.  After a period of approximately zero growth from mid-2010 through mid-2011, ATS expanded by 4.2% in the second half of 2011.

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 preliminary ATS data are based on monthly revenue reports from the Department of Finance and Administration.  Their latest report indicated fairly strong growth in Gross Receipts in January (+4.9% from the previous year).  Gross Receipts is a measure that primarily reflects sales and use taxes, with approximately a one month lag.  Hence, the report suggests that holiday sales in December 2011 were much improved over the previous year.  Final figures for Arkansas sales and use tax receipts will be available with the release of the January 2012 issue of Arkansas Fiscal Notes.

Gasoline sales data for the fourth quarter are incomplete, but preliminary estimates suggest an increase of approximately 1% — in spite of lower gas prices.  According to the oil price information service, the average price of gasoline in Arkansas was $3.22 in the fourth quarter — down from $3.49 in the third quarter.

The growth in ATSIG in the second half of 2011 brings Arkansas sales growth back in line with national retail sales.  According to the Census Bureau, U.S. Retail Sales increased by 1.2% in the third quarter and 1.9% in the fourth quarter.  ATSIG had been lagging behind in early 2011, but slightly outpaced U.S. retail sales in the second half of the year.  For the year as a whole, U.S. retail sales rose 6.9% compared to the 5.1% figure for ATSIG.

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

 #  #  #

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 2011:Q4 (Excel file)

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

Metro Unemployment Rates End 2011 Sharply Lower

Unemployment rates in Arkansas Metropolitan Statistical Areas (MSAs) declined in December — the third consecutive month of across-the-board reductions in jobless rates (seasonally-adjusted).  Previously-released statewide data showed that the Arkansas unemployment rate fell from 8.3 percent in September to 7.7 percent in December.  Rates in Arkansas metro areas showed even sharper declines over the three-month period–ranging from 0.7 percentage points in Hot Springs to 1.7 percent in the Memphis MSA.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

As shown in the table below, the raw data from the Bureau of Labor Statistics showed unemployment rates rising from November to December.  However, these increases were entirely seasonal in nature.  After seasonal adjustment, the monthly change in unemployment rates was negative for every MSA except Texarkana, where the rate was unchanged at 7.1%.  The end-of-year declines in unemployment bring Arkansas metro areas back into the set of MSAs with unemployment rates lower than a year earlier.  According to the BLS press release this morning, 329 of the nation’s 372 metro areas fell into this category in December.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

Independent data on nonfarm payroll employment was not as unambiguously positive as the household unemployment data.  Employment was up in 5 MSAs, but declined in Hot Springs, Jonesboro and Fort Smith.  Since statewide employment reached a low-point in February 2010, most of the state’s MSAs have seen positive employment growth.  However, Fort Smith and Pine Bluff have continued to experience job losses.  Compared to the start of the recession in December 2007, only Hot Springs has seen net positive job growth.

Source: Bureau of Labor Statistics

Arkansas Home Sales in 2011

The final sales report of the year from the Arkansas Realtors® Association (ARA) showed that home sales in December were down 6.2% from December 2010.  Total sales for the year were reported to be down slightly from the previous year (-0.6%), marking 2011 as the slowest sales year in recent history.  Nevertheless, there is reason to be optimistic about residential real estate markets in Arkansas.  Although 2011 sales were lower than the previous two years, they had been boosted in 2009 and 2010 by the Federal home-buyer’s tax-credit programs.  As shown in the figure below, home sales exhibited unusual spikes in the final months of the first-time home buyer’s program (November 2009) and at the conclusion of the second round of home-buyer tax credits (April 2010).  Sales in 2011 followed a more typical seasonal pattern, without any temporary boosts from government incentive programs.

Source: Arkansas Realtors® Association

After using standard statistical techniques to seasonally adjust the data, the extraordinary nature of the policy-induced sales spikes becomes even more apparent.  More important, the seasonally-adjusted data show a trend of increasing sales over the course of 2011.  Extrapolating this trend forward into 2012 suggests the emergence of a long-awaited, sustainable recovery in Arkansas residential real estate markets.

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

At the UALR Economic Forecast Conference in November, we anticipated that annual home sales for 2011 would be down slightly from the previous year (-0.8%), but that we would see a significant improvement in 2012 (+12.6%).  Although this would represent a significant improvement, the forecast is not based on expectations of a dramatic recovery in housing market conditions; rather, it reflects the expected outcome of slow steady growth starting from a very low base.  Given the typical seasonal pattern in home sales, however, it won’t be until the summer surge that we will have a clear indication of how the totals will end up in 2012.

 

December Unemployment Rate Drops to 7.7%

The Arkansas unemployment rate declined to 7.7% in December, down from a revised 7.9% rate in November.   Over the last two months of the year, the number of unemployed declined by 6,469 and the number employed rose by 16,190.  Accordingly, the sharp drop in the unemployment rate has taken place in the context of an expanding labor force.  Since Spring of 2011, we had seen the labor force participation rate decline sharply as the unemployment rate rose.  In the final months of year we’ve seen that trend almost completely reversed and we’re now right about where we were before the summer doldrums hit the Arkansas employment market.

Source: Bureau of Labor Statistics

The improvement in unemployment indicated by the household survey suggests that the temporary weakness we saw during 2011 has abated.  But there is still reason to be cautious about the outlook for 2012.  In the independent payroll survey released as part of today’s report, total employment for the month declined slightly from the previous month (-500, seasonally adjusted).  Moreover, the employment total for November was revised down by 1,600.  For the two months together, payroll employment was up by 5,000.  However, total employment remains below a peak reached in April 2011.

Source: Bureau of Labor Statistics

The December decline in payroll employment was spread across service-providing sectors.  One notable exception was Trade, Transportation and Utilities, which showed an increase of 1,900 jobs for the month.  Nevertheless, TT&U employment remains 4,800 jobs below the April 2011 peak.  Other sectors that continue to lag well below their levels of last spring include Manufacturing and Professional & Business Services.

Source: Bureau of Labor Statistics

Compared to a year ago (December 2010), total payroll employment is up by 8,000.   However, the next monthly report (Scheduled for March 13), will include annual benchark revisions to the payroll data.  As discussed in a previous post, the data revisions are likely to result in a sharp downward revision to the payroll figures for early 2011.  As a result, we are likely to see the year-over-year employment gains revised away in light of updated, more accurate data.

#  #  #

*Seasonally adjusted data for nonfarm payroll employment, reported in a format compatible with the monthly news release from the Arkansas Department of Workforce Services, are available here:  Table – Seasonally Adjusted NFPE.

Metro Area Unemployment Rates Down in November

Unemployment rates in Arkansas metro areas fell sharply in November, adding to declines registered in October.  The newest data, released this morning by the Bureau of Labor Statistics, show unemployment rates down in each of the Metropolitan Statistical Areas (MSAs) that include parts of Arkansas. The raw data (which are not seasonally adjusted) generally understate the magnitude of the declines. After seasonal adjustment, the declines in November ranged from -0.2% in Fort Smith to  -0.9% in Memphis.  For the two months of October and November, unemployment rates were down by at least one-half of a percentage point in all eight MSAs.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

After experiencing rising unemployment rates over the first half of 2011, the recent declines leave unemployment lower than the previous year in every MSA except Pine Bluff, where the unemployment rate was unchanged from November 2010.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement