Arkansas labor market conditions changed little in February. The unemployment rate ticked down by 0.1 percentage point to 4.5%, but both the household and payroll data showed declines in total employment. One year after the pre-COVID-19 business cycle peak, employment growth remains weak and the unemployment rate elevated. Nevertheless, the Arkansas data show that labor market conditions remain significantly better than the national economy overall. The U.S. unemployment rate was 6.2% in February.
The downtick in the unemployment rate reflected a continuing decline in the number of unemployed, which has declined from a peak of over 137 thousand in April to 61.6 thousand in February 2021 — about 9.5 thousand higher than a year ago. Household employment also declined in February, down 10.8 thousand. Compared to a year earlier, employment is down by over 18 thousand. The Labor Force (the sum of employed and unemployed) dropped by nearly 13 thousand in February.
Arkansas nonfarm payroll employment declined by 3.4 thousand in February, the first reported decline since last April (seasonally adjusted data, recently revised). Employment remained about 2.8% below year-ago levels, while the national statistics show year-over-year job losses of 6.2%.
Employment declines were distributed broadly across sectors, with only two sectors increasing: Education and Health services increased by 300 jobs (entirely in Health Care) and Other Services increased by 600. As shown in the third column of the table below, job losses were relatively large in three sectors that have been recovering with particular vigor: Construction was down by 900, Retail Trade was down by 400, and Leisure & Hospitality was down 2,200. All three are likely to have been affected by severe weather conditions in mid-February. Both Construction and Retail remain above levels of a year earlier, but all other sectors show year-over-year declines to varying degrees.
Overall, the employment report for February is mixed. A decline in the number of unemployed is welcome, but declines in employment suggest a pause in the pace of recovery. However, there is no indication of a new, ongoing period of weakness setting in. The mixed nature of the report suggests that recovery in labor markets is a long, gradual process—sometimes with bumps along the way.
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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.