The state-level employment report for August had mixed news for Arkansas. The headline was an unexpected increase in the unemployment rate, from 7.1% to 7.4%. The U.S. unemployment rate had been reported as declining from 10.2% to 8.4% in August, and Arkansas was one of only four states to see a nominal increase for the month (although Arkansas’ increase was not statistically significant). The states that had the largest declines in unemployment tended to be those with relatively high rates, while those with the lowest rates saw smaller declines or increases. Even after the slight uptick in August, Arkansas’ unemployment rate remained a full percentage point lower than the national average.
Under the current circumstances, an increase in unemployment is not unambiguously bad news. As shown in the figures below, the rise in the unemployment rate was primarily attributable to an increase in the number of unemployed, up 6,456 to nearly 100,000. But the number of employed also increased by nearly 32,000, driving an increase in labor force participation of 38,219. As employment opportunities re-emerge after labor market weakness, it is often the case that workers who had previously dropped out of the labor market resume their search for employment, temporarily boosting the unemployment rate. The sharp increase in labor force participation suggests this might be a factor in Arkansas unemployment uptick.
Arkansas Nonfarm payroll employment increased by 14,900 in August (seasonally adjusted), an increase of 1.2%. To put that number into context, average annual employment growth in 2017, 2018 and 2019 was 14,400. The increase in August continues a recovery that began in May: After falling 9.3% from February through April, Arkansas employment is now down only 4.1% compared to February. Although employment in Arkansas did not fall as sharply as the nationwide average, Arkansas’ recovery parallels that of the nation. The February-April decline for the U.S. was 14.6%, and the latest data show national employment still down 7.6% from the February peak.
The table below shows payroll employment changes by major sector. In terms of numbers of jobs, the February-April decline amounted to nearly 120,000, with significant losses in service-providing sectors, particularly Leisure & Hospitality, Education & Health, Retail Trade, and Professional & Business Services. Each of those sectors has bounced back considerably. In August, employment was up sharply in Retail Trade and Professional & Business Services – particularly in the category of Administrative & Support Services. In the case of Retail, statewide employment is now 3,600 higher than in February. On the other hand, employment in Manufacturing remains weak. It was up by 600 jobs in August, but remains 16,300 lower than in February.
The figures below illustrate how sectors that were hardest-hit by pandemic-related shutdowns have fared relative to the national totals. All series are normalized to February 2020 = 100, so percentage deviations from that baseline can be read directly from the charts. So, for example, national employment in Retail Trade initially declined by approximately 15% from February to March, while Arkansas employment in that sector fell by about 8%. The fact that employment in Arkansas retail sector is now higher than pre-pandemic levels is not a feature in the U.S. data.
Leisure and Hospitality Services suffered smaller employment declines in Arkansas, but have recovered with a trajectory similar to the national data.
In Education and Health Services, and in Manufacturing, the magnitude of employment declines in Arkansas matched the national average. While both sectors have seen some limited recovery since April, Manufacturing employment in Arkansas remains well-below re-pandemic levels.
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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.