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Metro Area Employment & Unemployment – January 2010

The latest information on employment and unemployment for Arkansas Metropolitan Statistical Areas (MSAs) was released last week.   The data for January were mixed.  There were no clear signs of recovery in regional labor markets, but no further deterioration was evident either.  This is consistent with the statewide data reported in a previous post–showing the state’s unemployment rate unchanged with only a small increase in payroll employment.

Household Survey

As displayed in the table below, the household survey showed that changes in unemployment rates around the state were mixed.  The unemployment rate ticked up in the Fayetteville, Fort Smith, Hot Springs and Texarkana.  It was unchanged in Little Rock and declined in Jonesboro and Pine Bluff.  

Sources:  Bureau of Labor Statistics, Institute for Economic Advancement
Sources: Bureau of Labor Statistics, Institute for Economic Advancement

The drop in Pine Bluff’s unemployment rate was particularly sharp.  In recent years, Pine Bluff has experienced large swings in employment and unemployment from December to January.  The changes were smaller this year, resulting in a measured decline in the seasonally-adjusted unemployment rate.   We’ll have to wait and see whether this is just a statistical fluke or a significant change.

Payroll Survey

The January payroll survey also showed mixed changes in employment.  Seasonally adjusted, January payroll employment was up slightly from the previous month in Texarkana, unchanged in Jonesboro, and down a bit in the state’s other MSAs. 

Source:  Bureau of Labor Statistics
Source: Bureau of Labor Statistics
(Note:  Although we have seen no formal annoucement of the change, the BLS public database now provides seasonally adjusted payroll employment data for Arkansas MSAs.  Assuming that this practice continues, the Arkansas Economist will henceforth rely on these official seasonally adjusted series, rather than using data adjusted by the Institute for Economic Advancement.)

Benchmark Revisions

This data release also included the annual benchmark revisions that have been discussed extensively in recent posts on the Arkansas Economist (MSA revisions were discussed here).  As expected, the revised data show sharply greater job losses during the recession than were previously reported — for most of the state’s MSAs.  The revised data show that Jonesboro was the only metro area to show positive growth in 2008, and all of the states MSAs suffered employment losses during 2009.  The decline in Fort Smith was particularly steep.

Source:  Bureau of Labor Statistics
Source: Bureau of Labor Statistics

Although the revisions showed larger employment declines for most of Arkansas’ MSAs, the revised data for Pine Bluff show that job losses were not as large as previously reported.  In this case, it’s no fluke.  The updated statistics are based on very accurate data from the Quarterly Census of Wages and Employment (QCEW)  for 2008 and early 2009.  

The anomolous upward revision to the payroll data for Pine Bluff was anticipated in a previous post on the Arkansas Economist.  A more complete evaluation of our exercise in “forecasting a revision of history” is forthcoming.

Arkansas Employment and Unemployment – January 2010

The latest state-level data on employment and unemployment were released today, covering January 2010.  We’re getting this monthly information a little bit later than usual because the Bureau of Labor Statistics took some additional time to go through the annual process of revising previously-published data using more complete information.

The unemployment rate in Arkansas held steady at 7.6 percent in January, remaining well below the U.S. average of 9.7 percent.  Today’s data release included a new smoothing technique for seasonally-adjusted unemployment data that eliminates some of the month-to-month variability.  By this new measure, the unemployment rate in Arkansas has been holding in the range of 7.5 to 7.6 percent for the past 6 months.  There is no indication that the unemployment rate is poised to go any higher, but neither is there any indication (yet) of an imminent decline in unemployment.

Source:  Bureau of Labor Statistics
Source: Bureau of Labor Statistics

The payroll employment figures showed some signs of recovery in service-sector employment.  Total nonfarm payrolls increased by 1,700 jobs in January (seasonally adjusted) with increases in the categories of Financial Services, Professional and Business Services, Education and Health Services, Leisure and Hospitality, and Other Services.  We continue to see weakness in the goods-producing sectors.  Manufacturing employment had been up slightly toward the end of 2009, but was down by 1,900 jobs in January.

Source:  Bureau of Labor Statistics
Source: Bureau of Labor Statistics

The payroll employment figures that were released this morning incorporated new benchmark revisions.  As reported on previous pages of the Arkansas Economist (here, here and here), the annual exercise of reconciling data from the Current Employment Statistics (CES) program with the Quarterly Census of Wages and Employment (QCEW) was expected to show sharply larger job-losses during 2009 than were previously recorded in the data.  This did, in fact, prove to be the case.  As shown in the figure below, the revised data show that payroll employment declined more sharply during 2008 and 2009 than was reported at the time, with previously unrecorded job losses accumulating to 18,200 by the end of the year (as of December). 

Source:  Bureau of Labor Statistics
Source: Bureau of Labor Statistics

The fact that job losses during 2009 were greater than previously measured is–to some extent–old news.  However, it means that it will take longer to see employment increase to the levels we saw prior to the onset of recession.

Metro Area Employment & Unemployment – 2009

Last week, the Bureau of Labor Statistics (BLS) announced its estimates for employment and unemployment in the nation’s Metropolitan Statistical Areas (MSAs) for December 2009. 

Unemployment rates for Arkansas MSAs were changed little from the previous month (seasonally adjusted).   As shown in the table below, the unemployment rate declined slightly in Fort Smith, rose slightly in Little Rock and Texarkana, and was unchanged in the state’s other MSAs.

Sources:  Bureau of Labor Statistics, Institute for Economic Advancement.
Sources: Bureau of Labor Statistics, Institute for Economic Advancement.

Compared to a year earlier, unemployment rates across the state were up sharply, with increases ranging from 1.1 percentage points (Fayetteville) to 1.9 percentage points (Fort Smith).

The December payroll employment statistics–compiled from a separate suvey–indicate a similar pattern.  From the previous month, job losses were recorded in all MSAs except Fort Smith (where employment was unchanged).  Over the last six months of 2009, employment declines ranged from 0.1 percent (Fort Smith and Texarkana) to 3.7 percent (Hot Springs).

Sources:  Bureau of Labor Statistics, Institute for Economic Advancement.
Sources: Bureau of Labor Statistics, Institute for Economic Advancement.

The next BLS release of payroll employment data will incorporate annual benchmark revisions.  As described in a previous article, these revisions are expected to show sharper job losses during the second quarter of 2009 than shown in the current data.  The table below illustrates the expected magnitude of the downward revisions for Arkansas’ MSAs, expressed as cumulative employment declines since the onset of the recession in December 2007.

Sources:  Bureau of Labor Statistics, Institute for Economic Advancement.
Sources: Bureau of Labor Statistics, Institute for Economic Advancement.

For most of Arkansas’ MSAs, the revisions are expected to be substantial.  Larger job losses are likely to be recorded for all MSAs except Pine Bluff, and in many cases the revised employment declines will be more than twice as large as the currently published statistics suggest.    In some sense, the data revisions reflect “old news:” the changes primarily reflect the evaluation of labor market conditions in the spring of 2009.  Nevertheless, the new data will change our perspective on where we presently stand and will have implications for the employment outlook in Arkansas’ MSAs as the economic recovery proceeds.

The December Employment Report

The December 2009 report on Arkansas employment and unemployment was released this morning by the Bureau of Labor Statistics.  

The household survey showed a record number of unemployed in Arkansas — 105,408.  That represents about 3500 more unemployed Arkansans in December than there were in November.  The survey also showed that the number of employed declined by 10,550 from November to December (although this decline follows an increase of 10,175 in November).   The unemployment rate rose from 7.4 percent to 7.7 percent.  This is the highest unemployment rate for Arkansas since June 1988.

Source:  Bureau of Labor Statistics
Source: Bureau of Labor Statistics

The payroll survey provided similarly disapointing news.  The number of workers on nonfarm payrolls declined by 3400 in December (seasonally adjusted).  Losses were largest in Trade, Transportation and Utilities (-2200) and Profesional and Business Services (-1900).  Some sectors experienced increases in employment:  for example, Manufacturing employment increased by 1000, jobs in Financial Services were up by 900, and the number of Education and Health workers rose by 800.  The table below summarizes employment changes by sector over the past six months. 

Source:  Bureau of Labor Statistics
Source: Bureau of Labor Statistics

As described in a previous post, the next release of payroll data will include annual benchmark revisions, reflecting more complete information collected in the BLS’s Quarterly Census of Employment and Wages (QCEW).  Based on the most recent information available, the benchmark revisions will show much larger job losses in Arkansas than were previously reported (particularly in 2009Q2).  The table below reports projected revisions to the payroll data, extended through the end of 2009:

Sources:  Bureau of Labor Statistics, Institute for Economic Advancement
Source: Bureau of Labor Statistics. Projected revisions estimated by the Institute for Economic Advancement

Repeating a cationary note from the previous post :  The actual benchmark revisions to be released by the BLS on March 10 will be calculated using far more detailed methods and more up-to-date information.   Nevertheless, the revisions are likely to be of the general magnitude presented here.

Forecasting a Revision of History

  “The bottom line:  Arkansas has lost 18,000 more jobs since the start of the recession than were previously recorded.”

In the business of monitoring and forecasting economic conditions, data revisions sometimes require tedious attention to detail and usually lead to only subtle changes in perspective.  At other times, revised data can dramatically alter our view of the world.  New data released by the Bureau of Labor Statistics (BLS) earlier this week fall into the latter category.  They  indicate that upcoming revisions to Arkansas employment statistics will reveal significant changes:  The employment situation in our state  is far worse than recent data have been leading us to believe. 

Month-to-month changes in payroll employment—as regularly reported in the media and here on the pages of the Arkansas Economist—come from the BLS’s Current Employment Statistics (CES) program.  According the the BLS, the CES surveys “about 150,000 businesses and government agencies, representing approximately 390,000 individual worksites.”  This sample is used to produce employment estimates for the nation, the states, and metropolitan statistical areas.  It is one of the most timely and accurate measure of economic activity that is available—especially on the regional and local levels.  Nevertheless, it is a survey—subject to sampling error and unmeasured changes in the structure of of the labor market.  Specifically, the CES must use estimates of the number of establishments in a given state or metro area.  During times when there are many business entrances or exits from the market, these estimates can be off the mark.

To improve the accuracy of the statistics compiled by the CES program, the BLS also calculates a Quarterly Census of Employment and Wages (QCEW).  This is the report that came out earlier this week. 

The QCEW is a comrehensive and detailed account of employment, disaggregated by sectors and by counties.  It is constructed from state unemployment insurance records, so it constitutes a full accounting of all covered jobs in the nation.  Because of it’s comprehensive coverage, the QCEW provides a more accurate picture of employment than the CES. 

However, data for the QCEW take longer to compile.   This week’s “new” data cover the period April-June 2009.  Old news.  But this more comprehensive measure will soon be used to “benchmark” the data from the CES.  On March 10, the BLS will release revisions to the CES payroll employment figures, based on the new data from the QCEW.  

For Arkansas, the QCEW showed that employment declined sharply during the first six months of 2009–down by approximately 33 thousand jobs.  In contrast, the monthly payroll employment reports from the CES have been suggesting that Arkansas employment began to stabilize in March (as reported in the Arkansas Economist here and here, for example).  We can be confident that the revisions will show sharply larger job-losses in early 2009 than are presently shown in the CES payroll data.

Rather than wait until March 10th, I have calculated  estimates for benchmarked CES payroll employment data—an exercise in forecasting an upcoming revision of history.  The results of this exercise are summarized in the figure below:

Arkansas Payroll Employment
Sources: Bureau of Labor Statistics and Institute for Economic Advancement

The projected benchmark series is calculated using some simple statistical procedures to estimate the  correspondence between the two measures in the past (Jan. 2001-Dec. 2007) and to forecast that relationship in the more recent past (Jan. 2008-June 2009).  For July 2009 through November 2009 (the most recent month availabile for the CES payroll data), month-to-month percent changes are used to extrapolate these estimates [see technical notes].

The projected revised data far sharply below current CES estimates during the first half of 2009, lowering the estimated level of employment in Arkansas for the second half of the year.  The bottom line:  Arkansas has lost 18,000 more jobs since the start of the recession than were previously recorded.

Investigating in more detail, I also estimated revisions to major sectoral categories of the data.  The results of this exercise, summarized in the table below, reveal that some sectors fared better according to the revised statistics (especially in the earlier stages of the recession, during 2008), but most fared worse (especially during 2009).   Overall, Arkansas lost slightly fewer jobs in 2008 than previously recorded, but lost far more in 2009. 

Sources:  Bureau of Labor Statistics, Institute for Economic Advancement
Sources: Bureau of Labor Statistics, Institute for Economic Advancement

The estimates presented here may not line up precisely with the benchmarked data to be released on March 10.  The BLS will use more detailed methods and up-to-date information to perform the actual benchmarking procedure.  Nevertheless, given the size of the discrepancy between current CES survey data and the available QCEW population data, the revisions are likely to be of this general magnitude.

Although the revisions will reveal a sharply larger employment decline in Arkansas, it remains true that the state has fared better than the nation as a whole.  The benchmarking process is expected to lower employment estimates for the total U.S. , leaving Arkansas in roughly the same relative position. 

Read More:
News — Reuters:  Data suggests U.S. still overstating employment and Recession shows shortcomings in U.S. Economic Data
Methodology — BLS:  QCEW Overview
Background — Pakko & Wall:  Revised Employment Data for Metro Areas in the Eighth District (2009)
 

The November Employment Report

Data on employment and unemployment in Arkansas were released this morning by the Bureau of Labor Statistics.  Overall, the report indicates a continuation of the trends we’ve seen in recent months.   There is no clear inidication of an upturn in employment, but neither is there evidence that the employment situation is deteriorating.  However, buried among the details of the report are some encouraging tidbits.

The household survey showed a decline in the unemployment rate, from 7.6 percent in October to 7.4 percent in November.  More important, the raw numbers that underlie the unemployment rate showed an increase of more than 10,000 in the number of people employed and a decrease of almost 2500 in the number of people unemployed.

The payroll survey showed an increase in jobs for November as well, although the data for October were revised downward to more than offset those gains.  Nevertheless, since March of 2009 nonfarm payrolls have shed only 2,500 jobs —  a decline of about 0.2%.

The sectoral composition of job gains and losses in November showed some interesting features:   Increases were registered in Construction (+1000), Manufacturing (+300), and Transportation (+1100)–three sectors that have been hard-hit during the recession.   In contrast, employment in Education and Health services declined by 1800 jobs in November.  Health services has added 13,000 jobs to the Arkansas economy since the beginning of the recession, but recent budgetary constraints at major hospitals has evidently stalled further expansion in this sector — for now.

Recovery in employment is likely to be a long, slow process.  At this point, the data suggest that we’re still in a period of stabilization.

Metro Area Unemployment in October

The October unemployment rates for Metropolitan Statistical Areas (MSAs) were released by the BLS this morning.  The report on state unemployment rates released two weeks ago showed that Arkansas’ unemployment rate rose by one-half of one percent to 7.6 percent.  The new data for Arkansas’ MSAs show similar sharp increases.

As noted in earlier posts, the MSA data are not seasonally adjusted by BLS.  The unadjusted data show that unemployment rates rose slightly or remained steady in October.  However, October is a month in which seasonal movements typically result in a falling unemployment rate.  After accounting for this recurring pattern, seasonally-adjusted measures show increases in the range of 0.4 to 0.6 percent.

The table below summarizes the MSA unemployment rate data for October.

MSA-urates-Oct09

The October Employment Situation

The Bureau of Labor Statistics released its latest report on state employment and unemployment this morning. The obvious headline for Arkansas is that the unemployment rate rose by one-half of a percentage point to 7.6 percent. This is the highest rate for Arkansas in over two decades–clearly not good news. Nevertheless, the state’s unemployment rate remains well below that national average rate of 10.2 percent.

As alarming as the unemployment rate increase appears, one should never become too concerned about a single observation. Indeed, the Arkansas employment data have recently been subject to considerable month-to-month volatility. Recall that the unemployment rate jumped to 7.4 percent in July before falling back to 7.1 percent in August and September. The chart below illustrates a three-month moving average of the unemployment rate, smoothing out some of the monthly variability. By this measure, the rate has been fairly steady at around 7.25 percent since mid-summer.

Source:  Bureau of Labor Statistics
Source: Bureau of Labor Statistics

The data on employment in Arkansas has been similarly volatile. In a post last month, I noted that the household survey and payroll survey were providing mixed signals about employment in September. The household survey showed a gain of 8400 jobs, while the payroll survey showed a decline of 7700 jobs. In the latest report, the September employment figure was revised upward, reducing the August-September job loss to 5300. For October, payroll employment was up by 4200 jobs, resulting in a net loss of only 1100 jobs over the two month period. Meanwhile, the household survey for September was revised upward (now showing an increase of nearly 8600 jobs), while the newly-released number for October showed a decline of 4100 jobs.

The chart below puts some of these monthly changes into context. Both measures of employment showed sharp declines from about October 2008 until March 2009. While falling slightly since then, Arkansas employment has evidently stabilized. We continue to see month-to-month movement in both series (some of which is smoothed out by considering a simple average of the two), but no significant upward or downward trend is discernable.

Source:  Bureau of Labor Statistics
Source: Bureau of Labor Statistics

October’s increase in the unemployment rate will surely generate alarmist headlines, but overall the October employment report shows a continuation of the labor market performance we’ve been observing since spring: sluggish but not deteriorating.

State Employment Report Provides Mixed Signals

September data on Arkansas employment and unemployment were released by the Bureau of Labor Statistics (BLS)  this morning.  The report provides mixed signals.

The household survey shows that the unemployment rate remained stable in September at 7.1%.  Arkansas is now 2.7 percentage points below the national unemployment rate.  The household survey also showed that the number of employed rose by more than 8400 from August to September.  The number unemployed also rose, but only by 539 jobs.

On the other hand, the payroll survey showed a large decline in the number of Arkansas jobs.   The new data show a seasonally-adjusted decline of 7700 jobs in September.  Moreover the number for August was revised down by 1600 jobs.  By this measure, the trend of stabilizing employment would seem to have collapsed.

Generally speaking, the payroll numbers are more accurate and provide more detail on labor market conditions.   However, they are also subject to significant revisions from month to month, and undergo a major benchmark revision in the spring of each year.  We may find that the September payroll employment report is a statistical fluke.  Nevertheless, we should not dismiss the numbers just yet.  The discrepency between the two surveys is an indication of the degree of uncertainty that we have regarding the employment outlook for Arkansas.

Two Measures of Employment in Arkansas
Two Measures of Employment in Arkansas

New Data on Employment in Arkansas Metro Areas

This morning, the Bureau of Labor Statistics (BLS) released its most recent data on employment and unemployment for Metropolitan Statistical Areas (MSAs). As described in a previous post, the MSA data are generally not seasonally adjusted. When it comes to comparing statistics from month to month, however, it can be important to adjust for regular seasonal patterns. The table below reports unemployment rates for Arkansas’ MSAs. It shows both the unadjusted data from BLS, as well as data that are seasonally adjusted using standard statistical techniques.

The seasonally adjusted data show that the unemployment rate remained constant from July to August in four of seven Arkansas MSAs. The unemployment rate fell slightly both in Jonesboro and in the Little Rock MSA. It rose by two-tenths of one percent in Texarkana. Unemployment rates around the state continue to be considerably higher than they were a year ago, but have remained fairly stable over the summer months.

Unemployment Rates for Arkansas MSAs
Unemployment Rates for Arkansas MSAs

The data on nonfarm payroll employment for MSAs is similarly unadjusted for seasonal patterns. After seasonal adjustment, trends over time are more easily identifiable. The set of figures below illustrates the trends for Arkansas metro areas. As with the state-level data on employment, the data are characterized by three distinct sub-periods since the onset of the recession (particularly for the two largest MSAs – Little Rock and Fayetteville): From December 2007 until about October 2008, employment growth was slow, but with no large job losses evident. The largest job losses occurred during the period from October 2008 through March 2009. Since March, employment has remained fairly stable.

In some of the MSAs, the recession had no discernible effect at all: Jonesboro experienced steady job gains throughout the recession. In Pine Bluff, the recession didn’t have much of an impact on a steady decline in jobs. In both Fort Smith and Hot Springs, employment has rebounded over the past three months. In fact, both Hot Springs and Jonesboro had more jobs in August 2009 than they did at the start of the recession in December 2007 (seasonally adjusted).

Nonfarm Payroll Employment in Arkansas MSAs
Nonfarm Payroll Employment in Arkansas MSAs

Click HERE to see a full size image of the figure above (PDF).

Three phases of recession for Arkansas MSAs
Three phases of recession for Arkansas MSAs

It’s too soon to say whether the upturn in job growth that we’re seeing in some of Arkansas metro areas reflects an incipient recovery from the recession. We will continue to monitor the data, looking for evidence of a broad-based, statewide upturn.