The Bureau of Labor Statistics (BLS) reported this morning that payroll employment in February had increased from the previous year in most of the nation’s metro areas: “267 metropolitan areas reported over-the-year increases in nonfarm payroll employment, 98 reported decreases, and 7 had no change.” Here in Arkansas, metro employment was up in only four metro areas (Fayetteville, Little Rock, Memphis, and Texarkana) and it was lower in the other four (Fort Smith, Hot Springs, Jonesboro, and Pine Bluff).
Seasonally adjusted data show that from January to February, employment declined in most of Arkansas’ metro areas. Hot Springs, in particular, showed a substantial monthly decline. In contrast, employment was up sharply in Texarkana and also rose in Fayetteville and Memphis. Since the national and statewide employment trough of February 2010, employment growth rates around the state have diverged remarkably. Texarkana, Fayetteville, and Memphis have all out-performed the statewide average. In Hot Springs, rapid employment growth during 2011 has reversed, and is now lower than its level in February 2010. In Pine Bluff and Fort Smith, employment has continued to decline. In fact, employment in Fort Smith is now 12.8% lower than at the start of the recession in December 2007.
Source: Bureau of Labor Statistics
The BLS report also noted that unemployment rates in February were down from the previous year in 344 of the nation’s 372 metro areas. Four of the eight metro areas in Arkansas were included on this list.
Today’s Arkansas Democrat-Gazette reports on mass layoff events in Arkansas during 2011. The data from the Bureau of Labor Statistics showed that there were 154 mass layoff actions in Arkansas during 2011, resulting the separation of 16,665 workers (as measured by new filings for unemployment insurance benefits). This was a record high for Arkansas, yet the data show a net increase in employment overall. Although mass layoff events generate news headlines, they constitute a relatively small component of dynamic labor market flows.
To put the Arkansas total in context, the following table compares total separations associated with mass layoffs with the size of each state’s labor force. This calculation allows us to compare the relative importance of mass layoffs among the states, accounting for differences in their sizes. The comparison shows that total mass-layoff separations in Arkansas amounted to 1.22% of the state’s labor force. The shares ranged from 0.12% in South Dakota to 2.40% in Wisconsin. Arkansas ranked number 17 among the 50 states plus D.C.
Source: Bureau of Labor Statistics
More generally, mass layoff events are only one component of gross job flows. To get a sense of their overall importance, consider the following comparisons for the U.S. in 2011: Separations associated with mass layoffs nationwide amounted to 1,808,451. According to the BLS’s Job Openings and Labor Turnover Survey (JOLTS), total layoffs and discharges were 20.7 million. Hence, mass layoffs accounted for only 8.8% of total layoffs and discharges. In turn, layoffs and discharges accounted for less than half of the total 48.2 million job separations in 2011. Meanwhile, new hires totalled 50.1 million. The gross separations and hiring numbers were more than 25 times as large as the net change in employment — and the net increase in employment (as measured by the JOLTS data) was larger than the total number of mass-layoff separations. When we hear about monthly or yearly changes in employment, the reported net figures represent only a tiny fraction of total labor market activity. Similarly, mass layoffs represent a very small share of total employment flows.
The unemployment rate for Arkansas 7.6% in February — unchanged from the previous month. The new data from the U.S. Bureau of Labor Statistics (BLS) and the Arkansas Department of Workforce Services (DWS) showed that changes in the number of employed and unemployed were smaller than in recent months, but the direction of the changes continued to be favorable: The number of employed was up approximately 3,400 and the number of unemployed was down by 400. February was the 7th consecutive month of rising employment and falling unemployment. The U.S. unemployment rate was also unchanged in February, holding at 8.3%.
Source: Bureau of Labor Statistics
The payroll survey showed a small net increase in jobs for the month, up approximately 700 jobs (seasonally adjusted). Sectors showing job losses included Trade, Transportation & Utilities (-1,800), Education & Health Services (-700), and Manufacturing (-200). Government employment was up 2,300, largely attributable to an increase in State Government employment (+2,000). Leisure & Hospitality Services and Other Services were also up for the month.
At the Arkansas State University Economic Outlook Conference today, we presented revised and updated forecasts for some key economic indicators for the Arkansas economy. At the time that the original forecasts were complied in late October 2011, data for some series were available only through the first half of the year (e.g., personal income). Some of the statistics that were available through the third quarter have subsequently been revised (particularly employment data). Hence, the original projections for 2012 and 2013 incorporated forecast estimates of how 2011 would turn out. Now that we have at least preliminary data for all of 2011, it seems a propitious time to revisit the forecasts.
In general, the data have confirmed our expectations that 2011 would show a slowdown in the pace of the economic recovery overall, but with clear signs of improvement in the final months of the year. In some cases, our expectations for improvement in the waning months of 2011 were exceeded — in other cases our outlook was overly optimistic. Accordingly, the forecast revisions are mixed. And the outlook — in broad strokes — continues to be one of steady but unremarkable growth as we slowly emerge from the aftermath of the 2008-09 recession.
Personal Income Yesterday’s data-release from the Bureau of Economic Analysis showed that total Personal Income in Arkansas grew by 3.7 percent in 2011 (Q4/Q4). This fell closely in line with our forecast of 3.6% growth for the year. Hence revisions to the outlook are minor. Due, in part, to lower-than-expected transfer payments in the second half of 2011, the forecast for personal income growth in 2012 has been revised down from 5.1% to 5.0%. The forecast for 2013 is unchanged at 3.9%.
Sources: Bureau of Economic Analysis, Institute for Economic Advancement
Arkansas Taxable Sales Including Gasoline Our proxy for state retail sales, Arkansas Taxable Sales Including Gasoline (ATSIG), finished 2011 with a Q4/Q4 growth rate of 5.0% — slightly higher than the 4.4% rate in the forecast. Some of this strength is expected to continue into 2012, prompting a slight upward growth revision from 3.2% to 3.3%. (The slowdown from 2011 reflects, in part, the expectation of slightly lower inflation rate.) Our original forecast included a (somewhat anomalous) slowdown in growth for 2013 (2.0%). Such a slowdown now appears less likely, and we are now forecasting 2013 growth of 3.9%.
Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement
Home Sales Arkansas home sales had been steadily improving during 2011 (on a seasonally-adjusted basis), but after having been supported by home-buyer tax credit programs in the previous two years, 2011 was still expected to be have the lowest total annual sales volume in recent memory. Sales in the last three months of the year were fairly strong, but were somewhat below our expectations. Compared to the previous year, total sales volume was down slightly more than forecasted: down 2.5% from the previous year’s (revised) sales figures. Carrying this weakness forward into the projected sales trajectory, the forecasts for 2012 and 2013 have been revised downward. Expectations of a double-digit growth rate in 2012 have given way to a revised forecast of +7.5%. Sales are still expected to improve by 4.3% in 2013, but end the year with a lower sales volume than previously forecasted.
Sources: Arkansas Realtors Association, Institute for Economic Advancement
Payroll Employment At the UALR Arkansas Economic Forecast Conference, we predicted that downward revisions to the payroll employment data would show that the year would end with a lower level of employment than the previous year — in sharp contrast to data that was available at the time. The actual data revision was slightly larger than anticipated, showing a Q4/Q4 employment loss of 0.4%, rather than the 0.2% that had been forecasted. Nevertheless, relatively strong job growth did materialize in the fourth quarter of 2011, as anticipated. Accordingly, the growth path for employment has not been revised (+1.3% in 2012 and +1.5% in 2013), but the path has been benchmarked to a slightly lower starting point.
Source: U.S. Bureau of Labor Statistics, Institute for Economic Advancement
Unemployment Rate Unemployment rate data for 2011 were also recently revised. The updated statistics showed that unemployment was not quite as high in mid-2011 as previously estimated. Moreover, the rate dropped over the last three months of the year much more rapidly than expected. Consequently, our unemployment rate forecasts have been revised downward significantly. 2011 ended with a rate of 7.9%, instead of the expected 8.2% rate. The downward trajectory of unemployment has been adjusted downward from this lower starting point. We now expect the unemployment rate to average 7.4% in the fourth quarter of 2012 (instead of 7.9%) and to fall to 7.0% by the fourth quarter of 2013 (instead of 7.6%). These would be welcome developments, if realized. The risk to this revised forecast is that new entrants and re-entrants to the labor force might put upward pressure on the unemployment rate as the labor market continues to improve.
Sources: U.S. Bureau of Labor Statistics, Institute for Economic Advancement
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Methodological Note: The original forecasts of November 2011 were produced using the Moody’s Economy.com Arkansas model, benchmarked to a composite of national economic forecasts. The revised projections presented here represent adjustments to the original forecasts in light of new and revised data. Underlying forecast assumptions and model estimates were not generally re-evaluated as a part of this exercise, but updated model forecasts for the unemployment rate and retail sales were factored into the analysis.
According to the latest statistics from the U.S. Bureau of Economic Analysis, Arkansas personal income rose 0.6% in the fourth quarter of 2011 — a somewhat smaller rate of increase than the U.S. average rate of 0.8%. The new data release also included upward revisions to Arkansas personal income in the first three quarters of 2011. From the fourth quarter of 2010 through the end of 2011, the latest figures show that personal income was up 3.7% in Arkansas and up 4.6% for the U.S. Farm income was particularly weak in 2011: Although it accounts for less than 2% of total personal income in the state, farm income declined 17.3% from the fourth quarter of 2010 through the fourth quarter of 2011. Arkansas nonfarm income was up 4.0% over the same period. As shown in the figure below, total personal income in Arkansas ended the year approximately 5.5% higher than its previous cyclical peak in 2008:Q2. U.S. personal income was 4.6% above the previous peak.
Excluding government transfer payments, the decline in incomes during the recession was substantially larger than for total personal income, and the recovery has taken correspondingly longer. The latest data show that Personal Income Less Transfers (PILT) rose by 4.8 percent in Arkansas during 2011 (Q4/Q4). For the U.S. overall, PILT was up by 5.8% over the same period. For both Arkansas and the U.S., a slowing pace of transfer payments was a factor dampening total income growth over the second half of 2011. As measured by PILT, Arkansas remains somewhat ahead of the nation in terms of economic recovery: At the end of 2011, PILT was 2.5% above its previous cyclical peak in Arkansas, and only 1.7% higher for the U.S.
Source: Bureau of Economic Analysis
Because this release was the first to include data for the entire year, the BEA report also summarized per capita personal income figures for 2011. In Arkansas, per capita income rose 3.7% to $34,014. For the entire U.S., per capita income was up 4.3% to $41,663. As of 2011, therefore, per capital personal income in Arkansas stood at 81.6% of the national average — leaving the state’s ranking among the 50 states plus District of Columbia unchanged at #45.
Source: Bureau of Economic Analysis
One consideration to bear in mind when evaluating personal income statistics is that they are not adjusted for inflation. Typically, the the national price index for personal consumption expenditures is used to adjust the nominal figures for inflation. By this measure, prices rose 2.5% in 2011, so the 3.7% increase in nominal per capita personal income correponds to a real (inflation-adjusted) increase of only 1.2%.
The smoothed seasonally adjusted unemployment rate estimates have been updated by the BLS. As described in a previous post, 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 produced using only seasonal adjustment techniques.
The table below shows that unemployment rates declined in all of Arkansas MSAs in January. The largest monthly declines (-0.4 percentage points) were registered for Fayetteville, Memphis, and Pine Bluff.
Source: Bureau of Labor Statistics
As shown in the figure below, the month-over-month declines in unemployment continue a trend that emerged in the final months of 2011. The recent declines have largely reversed the run-up in unemployment rates that we saw during the summer months.
New data on metro area employment and unemployment came out this morning. The BLS news release noted that “Unemployment rates were lower in January than a year earlier in 345 of the 372 metropolitan areas.” All of Arkansas’ MSAs were included in this total. The changes ranged from down 0.3 percentage points in Fort Smith and Jonesboro to down 0.9 in the Memphis MSA. The not seasonally adjusted data showed increases from December unemployment rates, but these largely represented seasonal effects associated with the end of the holiday shopping season. Smoothed seasonally adjusted unemployment rates will be available later in the day.
Source: Bureau of Labor Statistics
The seasonally-adjusted nonfarm payroll employment data (which reflect the recent benchmark revisions) show monthly employment increases in six of Arkansas MSAs. Fort Smith and Memphis both saw monthly declines. Compared to the previous year, employment was up in all metro areas except Fort Smith. In fact, the BLS news release reported that Fort Smith had both the highest number of job losses and highest percentage decrease of all the nation’s MSAs.
Source: Bureau of Labor Statistics
Since the beginning of the recession in December 2007, net employment changes are positive only in Jonesboro and Texarkana. Net employment losses in the other metro areas of the state range from 1.5% in Fayetteville to 12.8% in Fort Smith.
Final data on Arkansas Taxable Sales (ATS) for 2011:Q4 are now available, but there is little news to report. Based on new information from the Department of Finance and Administration on sales tax and gasoline tax receipts, the data on both ATS and the broader measure — Arkansas Taxable Sales Including Gasoline (ATSIG) — were nearly identical to our preliminary estimates. Growth rates for both measures are summarized in the table below.
Sources: Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement
Preliminary data for January are now available as well. Taxable sales in January were up 0.55% from the previous month (a 6.7% annual rate). Compared to the previous January, ATS was up 6.0%. With gasoline prices rising, ATSIG rose even more sharply in January. Compared to the previous month, ATSIG was up by over a full percentage point (approximately a 12.6% annual rate). From the previous year, ATSIG was up by 6.4%.
Sources: Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement
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The Arkansas Taxable Sales (ATS) series 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.
Yesterday’s employment report included the annual benchmark revisions to the payroll employment data. Each year, the numbers in the Current Employment Statistics (CES) data set are updated to reflect more accurate figures from the Quarterly Census of Employment and Wages (QCEW). This year’s revision “benchmarked” the CES data to levels consistent with the QCEW as of 2011:Q1. In addition, data from the QCEW itself were revised for the period covering last year’s benchmarking. Hence, the revision process affects employment growth estimates for both 2010 and 2011. (New seasonal factors are also estimated for the period 1990-present, but revisions from this source are generally small.)
The table below shows employment growth by sector for 2010 and 2011 (seasonally adjusted data). The first two columns report the data as previously published (as of January 2012). The second two columns show the revised data that came out yesterday. The first line shows that total employment growth in Arkansas was revised downward in both years. Employment growth in 2010 was marked down from 12,600 to 8,600 jobs. The revision for 2011 was even more substantial: The previously-published data showed an increase of 8,000 jobs for the year, whereas the revised data show a loss of 3,100 jobs.
Source: Bureau of Labor Statistics
The substantial mark-down in employment growth for 2011 was not attributable to any one sector. Several sectors were subject to sharp downward revision, including Contruction, Manufacturing (particularly Non-durable Goods), Wholesale Trade, Financial Activities, Education & Health Services, and Leisure & Hospitality. A few sectors added more jobs than we had previously thought: Retail Trade and Durable Goods Manufacturing are two examples.
The next table shows the revisions to employment growth in the state’s Metropolitan Statistical Areas (MSAs). The most substantial revision was for Fort Smith. Previously-published data had shown that Fort Smith lost 1,700 jobs in 2011. The revised data show job losses totalling 7,700. Data for Hot Springs were also subject to a substantial revision: Job growth of 1,500 was marked down to zero for 2011, and a small gain in the previous year was revised to show a net job loss. In contrast, data for Jonesboro were revised upward for both years.
Revisions to the data for the state’s two largest MSAs were relatively minor. Northwest Arkansas saw a very small downward revision for 2010 and an upward revision for 2011. In Central Arkansas job growth was revised slightly downward for both years. In both MSAs, employment growth remained positive for both years.
Source: Bureau of Labor Statistics
Of course, even the revised data are subject to further revision. This time next year we’ll see yet another version of the job-growth statistics for 2011.
The latest employment report from the U.S. Bureau of Labor Statistics (BLS) and the Arkansas Department of Workforce Services (DWS) show that the unemployment rate in Arkansas fell by 0.2 percentage points in January to 7.6%. This was the fourth consecutive monthly decline. The Arkansas unemployment rate is now 0.6 percentage points lower than its (revised) peak of 8.2 in July 2011.
Source: Bureau of Labor Statistics
The underlying details in the January unemployment report support a positive interpretation: The number of employed persons was up by nearly 6000, while the number of unemployed was down almost 2000. As a result, the unemployment rate decline occurred against a backdrop of a substantial expansion of the labor force. Since the unemployment rate peak in July 2011, the number of employed has risen by nearly 24,000 and the number of unemployed is down 6200.
The independent payroll survey showed modest job gains for the month, with increases spread across several sectors. Although the not-seasonally-adjusted data showed a net decline for the month, the job losses were largely seasonal as holiday-related employment declined (particularly in the Retail Trade and Leisure & Hospitality sectors). Seasonally adjusted data showed an increase of 4600 jobs for the month. Goods producing sectors saw an increase of 2300 jobs, with most of the gains in construction. Service providing sectors showing gains included Trade, Transportation & Utilities (+2200), Education & Health (+1700), and Leisure & Hospitality (+1700). These increases were partly offset by notable job-losses in Professional & Business Services (-1100) and Government (-2100).
Source: Bureau of Labor Statistics
Compared to a year ago, the newly-revised payroll data show a net increase of 4300 jobs. Education & Health Services continued to be the strongest-performing sector over the past 12 months, adding 4000 jobs. In contrast, manufacturing employment has fallen by 4600 jobs.
Benchmark Revisions
This monthly report on payroll employment included the annual benchmark revisions to the data. As previously reported, we were anticipating a sharp downward revision to the jobs data for early 2011. As of the new benchmark date (2011:Q1) we expected to see a downward revision of approximately 11,000 jobs. The actual revision was down 10,400. Estimation of new seasonal factors and updated source-data also resulted in a downward revision to the third-quarter statistics. At the end of 2011 (December) total payroll employment is now estimated to have been 1161.3 thousand, down 14.3 thousand from the previously-estimated 1175.6 thousand. The revised data now show that 2011 was a year of negative net employment growth. From December 2010 through December 2011, total payroll employment in Arkansas fell by about 3,100 jobs.
Sources: Bureau of Labor Statistics, Institute for Economic Advancement
