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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.

An Encouraging State Employment Report

One should always be cautious about placing too much emphasis on data for a single month, but the state employment report for August (released this morning by the Bureau of Labor Statistics) includes several encouraging signs for Arkansas.  Among the highlights of the report:

  • The unemployment rate in Arkansas fell by three-tenths of a percent to 7.1%.  The Arkansas unemployment rate is now 2.6 percentage points lower than the national average.  Arkansas was one of only 16 states to experience an unemployment rate decline.
  • Underlying the decline in the unemployment rate was a decrease in the number of people unemployed.  In July, Arkansas unemployment rolls topped 100,000 for the first time.  The August report shows that  number falling to 96.5 thousand.
  • Nonfarm payroll employment rose slightly in August.  Arkansas was one of only 8 states to experience an increase.  Moreover, the data for July were revised upward to show a net gain for that month as well.  (Arkansas was one of only 3 states to experience employment gains in both July and August).
  • Employment in goods producing sectors remains weak, but some of the key service-providing industries continue to show reslience.  For July and August, net job gains were recorded in Professional and Business Services, Education and Health Services, Other Services, and Government. 
  • The payroll employment data confirm a trend observed in a previous post:  After declining by 26.4 thousand between October 2008 and March 2009, the employment situation in Arkansas is stablizing.  Since March, employment has been approximately flat, with a net increase of 600 jobs through August.

– Michael Pakko

 arkempaug

Seasonally Adjusted Unemployment Rates for Arkansas MSAs

Earlier this week (on Sept. 1), the U.S. Bureau of Labor Statistics (BLS) announced the release of its latest estimates of unemployment rates for metropolitan statistical areas (MSAs) around the country. The data for Arkansas MSAs showed that unemployment rates remained lower than the national average, but were well above their levels of a year earlier. The data released by the BLS also showed that unemployment rose from June to July in every metro area of the state except Fort Smith.
    
The latter observation might be misleading. While the national and state-level data are released on a seasonally adjusted basis, the BLS does not seasonally adjust the data for MSAs.  But it is important to recognize seasonal patterns. Most economic data series follow a distinct seasonal pattern. Economists call this pattern “the seasonal cycle.” Unlike the business cycle—which is irregular and often unpredictable—the seasonal cycle is recurring and predictable.
    
In the case of the unemployment rate there are some obvious reasons for a seasonal pattern: The unemployment rate tends to fall near the end of the year as temporary workers are hired to take on the extra demand of holiday shopping. It tends to rise sharply in January and then recover during the spring. When students enter the employment market in search of summer jobs, the unemployment rate rises again.  Typically, July represents the high point of the summer.
    
So when one asks the question, “Why did unemployment rise in July?” the answer might very well be: “Because it was July.” That doesn’t help explain the more pressing question, “Where do we stand in this irregular and unpredictable business cycle?”
    
Seasonally adjusted data can help to illuminate the answer to that question. Research on the development of seasonal adjustment techniques has been formidable, but the application of state-of-the-art methods is not rocket science: most statistical software packages that are designed for economic analysis include seasonal-adjustment as a standard procedure.
    
So I took it upon myself to seasonally-adjust the unemployment rate data for Arkansas’ MSAs (using data from January 1999 through July 2009). Some statistics from that exercise are reported in the table below.
 
Unemployment Rates for Arkansas MSAs
Unemployment Rates for Arkansas MSAs

The seasonally adjusted data show that the unemployment rate fell or remained stable in four MSAs, not just in Fort Smith as suggested by the not-seasonally-adjusted data.  In Fayetteville, Hot Springs, and Jonesboro, the not-seasonally-adjusted unemployment rate rose “because it was July.”  After accounting for seasonal factors, the situation doesn’t seem so bad after all.  In fact, for every metro area in Arkansas the level of the unemployment rate is lower after adjusting for seasonal patterns.  So why do the data show such high unemployment rates for Arkansas’ MSAs in July? . . .  “Because it was July.”

— Michael Pakko

Arkansas employment stabilizing

The latest payroll employment data for Arkansas (July 2009) indicate that the severe job losses we witnessed in late 2008 and early 2009 have subsided.  From October 2008 through March 2009, Arkansas suffered a net decline of more than 26 thousand jobs.  From March through July, the net loss has totaled only about 400 jobs.

Job losses are never good news, but the fact that we are no longer seeing the steep declines that we did during the most severe phase of the recession suggests that the worst might be over.  Employment tends to be a lagging indicator, so when we see job growth moving in a positive direction it will be a very good sign. 

Arkansas Nonfarm Payroll Employment