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Arkansas Employment and Unemployment – August 2021

The state employment report for August had no real surprises, but was generally consistent with the ongoing trend of slowly improving labor market conditions as we emerge from the COVID-19 recession.

Data associated with the BLS Household survey was comparatively upbeat: The unemployment rate fell by one-tenth of a percentage point to 4.2% and remains a full percentage point below the U.S. average. The national unemployment rate had previously been reported to have fallen by two tenths in August to 5.2%.

Source: Bureau of Labor Statistics

The slight drop in Arkansas’ unemployment rate was undergirded by a decline in the number of unemployed (-1,761) and an increase in the number of employed (+3,412).  As a result, the labor force increased by 1,651. The number of unemployed has followed a fairly consistent downward trend since the business cycle trough of April 2020. Employment and the total Labor Force have followed a rather unusual pattern over the past year: Both showed an uncharacteristically sharp increase in December 2020, with a modest downward trend since then.

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

As shown in the figure below, the pattern of employment growth indicated by the household survey is quite a bit different from the payroll employment statistics. Both show the downturn associated with the recession from February 2020 through April 2020, although the household survey indicated a smaller initial decline. The uneven pattern of recovery shown in the household data is not at all shared by the payroll survey, which shows a relatively smooth recovery path. Large swings in the data from the household survey are often subject to being erased by data revisions, so it will not be surprising if the December 2020 jump in household employment is smoothed away when the data are revised early next year.

Source: Bureau of Labor Statistics

If we take the endpoints of the recession as being approximately accurate, the two measures both suggest that employment remained lower in August 2021 than before the recession, with a remaining shortfall of 1.5% (payroll survey) to 1.8% (household survey).

Payroll Employment
Speaking of the survey, nonfarm payroll employment was down slightly in August, falling by 1,500 (seasonally adjusted). The not-seasonally adjusted data showed an increase of 2,000 jobs, but that increase was primarily attributable to the back-to-school effect on state and local government employment (+3,100). After seasonal adjustment, state and local government employment was down by 1,300 jobs, with most of decline reflected in a seasonally adjusted downturn in local government employment.  In other words, the public school employment was smaller than is typically associated with the back-to-school effect.

Among other sectors, job losses were registered across the goods producing sectors, as well as within the categories of Trade, Transportation and Utilities. On the other hand, service-providing sectors generally showed employment gains for the month, with Leisure & Hospitality services showing a substantial increase.

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

Compared to employment levels at the previous cyclical peak (Feburary 2020), total payroll employment is down by 22,100 jobs, or 1.8%. Several sectors have emerged to show net employment increases from pre-pandemic levels, including Durable Goods Manufacturing, Retail Trade, Financial Servicesm, Professional & Business Services, and Other Services. Lagging sectors include Nondurables Manufacturing, Education & Health Services, Leisure and Hospitality Services, and Local Government.

The pace of employment recovery has slowed in recent months, but Arkansas continues to maintain a trajectory of recovery that outpaces the U.S. total.  As of August, Arkansas’ 1.8% net decline since February 2020 compares with a 3.5% remaining shortfall in the national data.

Source: Bureau of Labor Statistics

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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.