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Arkansas Employment and Unemployment – May 2020


Last month, the April employment report for Arkansas was not as bad as expected.  The May report is better than expected.

The unemployment rate dropped from a revised 10.8% in April to 9.5% in May.  The number employed rebounded sharply from its April decline, up 46,378.  The number of unemployed dropped by 12,663 from 140,898 to 128,235.  The labor force total continues to fluctuate widely, increasing by 33,715 in May after declining by 76,788 in April.

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

The drop in unemployment reported in the household survey is certainly welcome news, but it is somewhat at odds with the unemployment insurance claims data.  For both Arkansas and the U.S., continuing claims for unemployment insurance were higher in May than in April, and both continuing claims and initial claims remain elevated as of the latest data released yesterday.  Expressed as a percent of the labor force, the continuing claims data suggest insured unemployment rates of approximately 14% for the U.S. and 10% for Arkansas.

Source: Department of Labor

The elevated unemployment insurance claims levels suggest that there is a great deal of churning going on in labor markets, complicating the interpretation of the unemployment data.  In addition, there continue to be some survey problems in the proper classification of “employed” versus “unemployed” for persons displaced by COVID-related shutdowns. But the clear gains employment (reinforced by the payroll data), indicate that the labor market improved in May, and that Arkansas has thus far fared better than the rest of the nation, on average.

Payroll Employment
Nonfarm payroll employment jumped 21,400 in May, bouncing back somewhat from a revised 109,200 decline in April (seasonally adjusted).  The April report had shown proportionally smaller declines for Arkansas than in the U.S. data, particularly in sectors directly affected by COVID-related shutdowns (e.g. Retail Trade and Accommodations & Food Services).  Consequently, we had not expected to see as sharp a rebound in May as reported in the national data.  As it turns out, the May rebound in Arkansas was a 1.8% jump, nearly equal to the 1.9% increase for the U.S.  From February through May, Arkansas payroll employment has shown a net decline of 7.6%, compared to 12.8% in the U.S. data.

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

A breakdown by sector shows that the largest employment gains were in Leisure & Hospitality Services, Education & Health Services, and Retail Trade, each of which suffered particularly sharp declines in April.  Not all sectors saw increases in May:  Employment in Wholesale Trade dropped slightly, and Manufacturing employment slid deeper into negative territory.  Government employment declined by 4,400, due to employment declines at educational institutions.  This decline is not unusual, but it typically shows up in June and July.  Compared to a year earlier, payroll employment in Arkansas was down 91,000 jobs.

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

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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.