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Metro Area Unemployment and Employment – April 2013

Progress toward lower unemployment rates in Arkansas metro areas has ground to a halt.  Statistics for April show that unemployment rates were higher than a year earlier in all the state’s Metropolitan Statistical Areas (MSAs) except for Fayetteville.  The press release from the Bureau of Labor Statistics reported that Fayetteville was one of 276 MSAs around the nation that saw a year-over-year decline.  The state’s other MSAs were among the 78 metro areas that saw higher unemployment rates.

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

The year-over-year comparisons refer to data that are not seasonally adjusted.  For meaningful month-to-month comparisons, the BLS publishes smoothed seasonally adjusted estimates.  As shown in the table below, these estimates show that the unemployment rate was steady in Fort Smith and Jonesboro, but ticked up in the seven other metro areas that include parts of Arkansas.

Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Estimates

Underlying statistics from the household unemployment-rate data also showed a monthly uptick of employment in the state’s two largest metro areas, but reveal a downward trend in all of the state’s MSAs except for Fayetteville.  As illustrated in the figure below, the downturn in employment is particularly noticeable since the beginning of this year.  In Hot Springs and Texarkana, household employment is more than 2-1/2% lower than in January 2012.  The reason that unemployment rates haven’t risen in response to these employment declines is due to commensurate downward trends in labor force participation.

Source: Bureau of Labor Statistics, Smoothed Seasonally Adjusted Metropolitan Area Estimates

In the statewide data, weak household employment data have contrasted with improving statistics from the payroll employment reports.  The same puzzle seems to exist in the MSA data.  As shown in the table below, nonfarm payroll employment increased in several of the state’s metro areas in April.  Compared to a year earlier, payroll employment was higher in Fayetteville, Hot Springs, Jonesboro, Little Rock, and Memphis.  Employment was flat in Fort Smith and down in Pine Bluff and Texarkana.  Pine Bluff remains the only metro area to have experienced continued contraction since the statewide employment trough of February 2010.  At the other extreme, both Fayetteville and Jonesboro have higher payroll employment in April 2013 than they did before the onset of the 21008-09 recession.

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

The contrast between the household and payroll employment reports is a puzzle.  Typically, the payroll reports are considered to be more accurate, but are also subject to substantial revision.  For that reason, the renewed weakness in household employment is a concerning trend that we will continue to monitor closely.