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Employment Data Revisions – Some Additional Details

Yesterday’s employment report included the annual benchmark revisions to the payroll employment data.  Each year, the numbers in the Current Employment Statistics (CES) data set are updated to reflect more accurate figures from the Quarterly Census of Employment and Wages (QCEW).  This year’s revision “benchmarked” the CES data to levels consistent with the QCEW as of 2011:Q1.  In addition, data from the QCEW itself were revised for the period covering last year’s benchmarking.  Hence, the revision process affects employment growth estimates for both 2010 and 2011.  (New seasonal factors are also estimated for the period 1990-present, but revisions from this source are generally small.)

The table below shows employment growth by sector for 2010 and 2011 (seasonally adjusted data).  The first two columns report the data as previously published (as of January 2012).  The second two columns show the revised data that came out yesterday.  The first line shows that total employment growth in Arkansas was revised downward in both years.  Employment growth in 2010 was marked down from 12,600 to 8,600 jobs.  The revision for 2011 was even more substantial:  The previously-published data showed an increase of 8,000 jobs for the year, whereas the revised data show a loss of 3,100 jobs.

Source: Bureau of Labor Statistics

The substantial mark-down in employment growth for 2011 was not attributable to any one sector.  Several sectors were subject to sharp downward revision, including Contruction, Manufacturing (particularly Non-durable Goods), Wholesale Trade, Financial Activities, Education & Health Services, and Leisure & Hospitality.  A few sectors added more jobs than we had previously thought:    Retail Trade and Durable Goods Manufacturing are two examples.

The next table shows the revisions to employment growth in the state’s Metropolitan Statistical Areas (MSAs).  The most substantial revision was for Fort Smith.  Previously-published data had shown that Fort Smith lost 1,700 jobs in 2011.  The revised data show job losses totalling 7,700.  Data for Hot Springs were also subject to a substantial revision:  Job growth of 1,500 was marked down to zero for 2011, and a small gain in the previous year was revised to show a net job loss.    In contrast, data for Jonesboro were revised upward for both years. 

Revisions to the data for the state’s two largest MSAs were relatively minor.  Northwest Arkansas saw a very small downward revision for 2010 and an upward revision for 2011.  In Central Arkansas job growth was revised slightly downward for both years.  In both MSAs, employment growth remained positive for both years.

Source: Bureau of Labor Statistics

Of course, even the revised data are subject to further revision.  This time next year we’ll see yet another version of the job-growth statistics for 2011.

Unemployment Rate Revisions

Next week we’ll see the results of the long-awaited benchmark revisions to payroll employment data for Arkansas.  In the meantime, the Bureau of Labor Statistics (BLS) has completed its annual revision of the Local Area Unemployment Statistics (LAUS).  Data for the LAUS are based on the same concepts and definitions as the national unemployment rate figures, but are calculated using statistical models that incorporate information from a number of sources.  Each year, the BLS revises labor force and unemployment data to incorporate updated population data, other data revisions, and reestimation of statistical models.

The revised figures for Arkansas’ unemployment rate show a slightly different pattern than did the previously-published data.  As shown in the figure below, the revised data show that the unemployment rate was higher than previously published from mid-2010 through mid-2011.  On the other hand, the unemployment-rate surge that we saw in the latter part of 2011 has been largely revised away.  For the month of December 2011, the new data show the rate at 7.8% — slightly higher than the 7.7% that was previously reported.

Source: Bureau of Labor Statistics

Metro Area Unemployment Rates

During 2011, the BLS began publishing smoothed seasonally-adjusted metropolitan area estimates for labor force and unemployment data.  The smoothed seasonally adjusted (SSA) estimates are processed using an algorithm that incorporates a long-run trend smoothing procedure.  Hence, the estimates show less month-to-month variability than data that is subjected to more conventional seasonal-adjustment techniques.  Beginning with the next Metropolitan Area Employment and Unemployment news release, the Arkansas Economist will begin publishing these estimates instead of the figures calculated in-house by the Institute for Economic Advancement.

Comparing the chart below to the most recent analysis of metro area unemployment rates, the overall pattern of unemployment-rate movements is basically the same but with somewhat lower volatility.  Because the smoothing procedure reduces the magnitude of month-to-month changes, the SSA data ended the year showing higher unemployment-rate levels than a simple seasonal adjustment technique. (That is, some of the rapid decline in unemployment rates that occurred in the last three months of the year is treated as transitory by the smoothing algorithm.)  The SSA data make for less dramatic headlines — rather, they provide a more measured evaluation of changes in metro area unemployment rates over time.

Source: Bureau of Labor Statistics

 

 

Arkansas House Prices – 2011:Q4

New data from the Federal Housing Finance Agency show Arkansas house prices rising over the second half of 2011.  The statewide average “All-Transactions Index” increased 0.3% in the fourth quarter, following a revised 0.8% gain in the third quarter.  Comparable data for the U.S. showed a similar rebound in the second half, up 0.4% in the fourth quarter following a 1.0% increase in the third quarter.  Arkansas home prices are still down 0.7% from the end of 2010, but evidence is accumulating that the trend of declining prices has abated.

Source: Federal Housing Finance Agency

Of course, house prices in different areas of the state do not move in unison.  Fourth quarter changes in the FHFA indexes were mixed among the state’s metropolitan areas.

  • In the two metropolitan areas where prices have fallen the most over the past five years — Fayetteville-Springdale-Rogers and Memphis — fourth quarter data showed slight declines, but not enough to offset the increases of the previous quarter.
  • Prices in Texarkana also fell slightly, but the longer-term trend remains distinctly positive.
  • Hot Springs has seen rather dramatic price declines since the end of the recession, but had experienced rapid price increase over the previous three years.
  • In Pine Bluff, prices were up sharply in the fourth quarter, but not enough to erase price declines registered in 2010.
  • Prices in Fort Smith have risen slightly in the second half of 2011, and appear to have stabilized since the beginning of 2010.
  • Stability has characterized house prices in Central Arkansas.  On net, prices in the Little Rock-North Little Rock-Conway metro area have changed little since 2007, when prices in other areas of the nation began to decline.
  • Home prices in Jonesboro never did experience any substantial price declines.  Beyond some temporary ups and downs, prices have continued to rise steadily.
Source: Federal Housing Finance Agency

Although Arkansas house prices appear to have stabilized toward the end of 2011, downward price pressures remain.  In particular, ongoing foreclosure activity and other sales of “distressed” properties tend to drive average prices lower.  This is more likely to be a factor in areas of the state where general economic conditions remain weak.  Nevertheless, the fact that mortgage delinquency rates and foreclosure activity are lower in Arkansas than elsewhere in the nation bodes well for the outlook.

Metro Unemployment Rates End 2011 Sharply Lower

Unemployment rates in Arkansas Metropolitan Statistical Areas (MSAs) declined in December — the third consecutive month of across-the-board reductions in jobless rates (seasonally-adjusted).  Previously-released statewide data showed that the Arkansas unemployment rate fell from 8.3 percent in September to 7.7 percent in December.  Rates in Arkansas metro areas showed even sharper declines over the three-month period–ranging from 0.7 percentage points in Hot Springs to 1.7 percent in the Memphis MSA.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

As shown in the table below, the raw data from the Bureau of Labor Statistics showed unemployment rates rising from November to December.  However, these increases were entirely seasonal in nature.  After seasonal adjustment, the monthly change in unemployment rates was negative for every MSA except Texarkana, where the rate was unchanged at 7.1%.  The end-of-year declines in unemployment bring Arkansas metro areas back into the set of MSAs with unemployment rates lower than a year earlier.  According to the BLS press release this morning, 329 of the nation’s 372 metro areas fell into this category in December.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

Independent data on nonfarm payroll employment was not as unambiguously positive as the household unemployment data.  Employment was up in 5 MSAs, but declined in Hot Springs, Jonesboro and Fort Smith.  Since statewide employment reached a low-point in February 2010, most of the state’s MSAs have seen positive employment growth.  However, Fort Smith and Pine Bluff have continued to experience job losses.  Compared to the start of the recession in December 2007, only Hot Springs has seen net positive job growth.

Source: Bureau of Labor Statistics

Metro Area Unemployment Rates Down in November

Unemployment rates in Arkansas metro areas fell sharply in November, adding to declines registered in October.  The newest data, released this morning by the Bureau of Labor Statistics, show unemployment rates down in each of the Metropolitan Statistical Areas (MSAs) that include parts of Arkansas. The raw data (which are not seasonally adjusted) generally understate the magnitude of the declines. After seasonal adjustment, the declines in November ranged from -0.2% in Fort Smith to  -0.9% in Memphis.  For the two months of October and November, unemployment rates were down by at least one-half of a percentage point in all eight MSAs.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

After experiencing rising unemployment rates over the first half of 2011, the recent declines leave unemployment lower than the previous year in every MSA except Pine Bluff, where the unemployment rate was unchanged from November 2010.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

Arkansas House Prices – 2011:Q3

New data from the Federal Housing Finance Agency (FHFA) show that house prices in Arkansas increased slightly in the third quarter,  and data for the second quarter were revised to show a modest increase as well.   The FHFA All-Transaction Index for Arkansas increased by 0.4% from the second quarter to the third, leaving home prices down 1.8% from a year earlier.  The index for the U.S. was up 0.9% for the quarter, but remains 4.3% lower than the previous year.

Source: Federal Housing Finance Agency
Source: Federal Housing Finance Agency

Among Metropolitan Statistical Areas (MSAs) that include parts of Arkansas, prices were up in Fayetteville-Springdale-Rogers, Fort Smith, Jonesboro, Little Rock-N. Little Rock-Conway, and Memphis.  Prices were down in Hot Springs, Pine Bluff and Texarkana.  Compared to the third quarter of 2010, prices were higher in two of the state’s MSAs:  Hot Springs and Texarkana. 

House prices in Arkansas have generally been trending downward from the beginning of 2009, and the increase in prices in the third quarter only partly reversed the accumulated declines.  Compared to two years ago, house prices are down in all of Arkansas’ MSAs.  But in the longer run, house prices outside of Northwest Arkansas have retained much of their value.  Over the past 5 years, the net change in house prices has been positive in 5 of the state’s MSAs, and are essentially unchanged in Pine Bluff.  Only the Fayetteville and Memphis metro areas have shown net declines since the third quarter of 2006.

Source: Federal Housing Finance Agency
Source: Federal Housing Finance Agency

Metro Area Unemployment – September 2011

Yesterday, the September figures for employment and unemployment were released by the Bureau of Labor Statistics.  The not-seasonally-adjusted data for Arkansas metro areas show that unemployment was higher in September of 2011 than in September of 2010 everywhere except Hot Springs.  On a month-to-month basis, unemployment rates were down across the state; however, this drop represents part of the typical seasonal effect that is seen in August and September — when the students are back to school and teachers are back to work.  After seasonal adjustment, the change in unemployment rates from August to September was postive in each of Arkansas MSAs.

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

As shown in the chart below, there is a clear trend emerging for 2011.  After some improvement in 2010, unemployment rates have been rising for several months now.   Higher rates of unemployment are emerging in nearly every area of the state, and the magnitudes of increase rates have been substantial:  Since February, unemployment rates are up more than a percentage point in Fayetteville, Little Rock and Pine Bluff.

Source: Bureau of Labor Statistics; Seasonally adjusted by the Institute for Economic Advancement.
Source: Bureau of Labor Statistics; Seasonally adjusted by the Institute for Economic Advancement.

Metro Area Employment and Unemployment – August 2011

As previously reported, the unemployment rate for the state ticked up one-tenth of a percent in August, so it might appear anomalous that data released this morning by the Bureau of Labor Statistics and Arkansas Workforce Services shows that unemployment rates in each of the state’s metro areas dropped for the month.  The discrepancy is due to the fact that state-level data are seasonally adjusted, whereas the metro area data are reported on a not-seasonally-adjusted basis.  After applying simple statistical procedures for seasonal adjustment, however, unemployment rates in the state’s metro areas generally rose in August — consistent with the statewide data.  (One important seasonal factor affecting unemployment rates in August is the return of teachers to work and students to school.  This tends to lower measured unemployment, but says little about the underlying state of labor markets.  Seasonal adjustment accounts for this recurring pattern.)

As shown in the table below, seasonally-adjusted unemployment rates in August were higher than July in all but two of the state’s Metropolitan Statistical Areas (MSAs).  Memphis was unchanged at 10.2% and Texarkana’s rate ticked down from 7.9% to 7.8%.  Unemployment rates in Fayetteville, Hot Springs, and Jonesboro rose by 0.3%, with smaller increases in Fort Smith, Little Rock and Pine Bluff.

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

Seasonally adjusted unemployment rates had been declining during the latter part of 2010, but have clearly been on a rising trajectory since the beginning of this year.  Over the past year and a half, Pine Bluff and Memphis have maintained the highest unemployment rates in the state, Fayetteville and Little Rock the lowest rates, with the state’s other MSA’s clustered near the statewide average. 

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

Data from the separate payroll survey reinforces the weakness indicated by the unemployment figures.  From July to August, payroll employment declined in all of Arkansas’ MSAs except Hot Springs.  Compared to a year ago, employment has declined in Fayetteville, Jonesboro, Little Rock, Pine Bluff, and Texarkana.  Since the statewide employment trough in February 2010, however, most of the states metro areas still show positive net job growth.  Only Memphis and Pine Bluff had lower employment in August 2011 than in February 2010.  Compared to the start of the recession, employment in Hot Springs is up by 4.1%, but is lower in all of the other MSAs — ranging from -0.8% in Jonesboro to -8.4% in Memphis. 

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

Metro Area GDP – 2010

The Bureau of Economic Analysis released its “advance” estimates on metro area GDP for 2010 on Tuesday.  For all U.S. metropolitan areas combined, the report showed that real (inflation-adjusted) GDP increased by 2.5% in 2010 after declining 2.5% in 2009.  Increases were reported in 304 of the nation’s 366 Metropolitan Statistical Areas (MSAs).  As shown in the table below, each of Arkansas’ MSAs showed positive growth, with Fayetteville, Fort Smith, Jonesboro and Pine Bluff all showing growth in excess of the national average.  Little Rock was the slowest-growing MSA, but it was also the only metro area in the state to have experienced positive growth in 2009.

Source: Bureau of Economic Analysis
Source: Bureau of Economic Analysis

The 2010 statistics are classified as “advance” statistics, meaning that they are preliminary and based on incomplete source data.  Only time will tell what subsequent revisions to the data will show.  Tuesday’s release included revisions to previous years’ data.  Each of Arkansas’ MSAs showed a downward revision compared to earlier-released estimates (see Metro Area GDP – 2009).

Metro Area Employment and Unemployment – July 2011

As previously reported, the statewide unemployment rate rose slightly in July, from 8.1% to 8.2% (seasonally adjusted).  New data released this morning shows that most of Arkansas’ Metropolitan Statistical Areas (MSAs) experienced stable or lower unemployment rates.  As shown in the table below, not-seasonally-adjusted unemployment rates declined in all of the state’s MSAs except for Texarkana.  Unemployment tends to be higher during the summer months, reflecting the impact of summer vacation for school employees and students.  There is typically a very slight drop in unemployment rates between June and July.   After accounting for these seasonal regularities, seasonally adjusted figures show unemployment rates declining in Hot Springs, Jonesboro, Little Rock, Memphis, and Pine Bluff.   Texarkana saw a small uptick in unemployment, while rates in Fayetteville and Fort Smith were unchanged.

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

The Bureau of Labor Statistics reported that unemployment rates in July were lower than a year earlier in 257 of the nation’s 372 MSAs, higher in 94, and unchanged in 21.  Here in Arkansas, only Hot Springs shows a lower unemployment rate than in July 2010.

The figures for nonfarm payroll employment in Arkansas’ MSAs show mixed results for July:  Compared to the previous month, employment declined in Fayetteville, Fort Smith and Texarkana.   Increases were recorded for Pine Bluff, Memphis, and Hot Springs.   The payroll data for Hot Springs have been particularly volatile in recent months, but as of the most recent observation, Hot Springs employment is 7.3% higher than a year ago, 7.8% higher than the employment trough of February 2010, and 2.6% higher than at the start of the 2008-09 recession.  Jonesboro also shows gains over all of those time-horizons, with employment up 1.0% since the start of the recession.

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