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State jobless rate dips to 7%, but work force is shrinking

Posted: December 22, 2012 at 2:09 a.m.

— Arkansas’ unemployment rate fell to 7 percent in November from 7.2 percent in October, the U.S. Bureau of Labor Statistics said Friday.

The rate has bounced up and down this year but has remained below 8 percent since November 2011. The drop is well within the bureau’s margin of error of 0.9 percentage point, so it remains statistically unchanged.

The nation’s unemployment rate was 7.7 percent in November.

Arkansas’ civilian labor force continued to decline, according to the report. There were 1,363,400 Arkansans in the labor force last month, a combination of those employed and those seeking work. That’s 12,400 fewer than in November 2011 and 8,700 fewer than in October.

For the past six months, the labor force has dropped in size when compared with the previous month. There were 27,000 fewer people in the labor force in November than in May.

It’s impossible to know why the civilian labor force is shrinking, but the most likely answer is that people get discouraged about looking for jobs and give up, said Greg Kaza, executive director of the Arkansas Policy Foundation.

Discouraged job seekers dropping out is the primary reason for declines in the civilian labor force nationally, Kaza said.

Other plausible reasons for the drop are Arkansans who decide to return to school if they can’t find jobs or who take early retirement, said Michael Pakko, chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock.

Arkansas’ civilian labor force has not been healthy at any point since the recession ended in June 2009, said John Shelnutt, administrator for economic analysis and tax research for the state’s Department of Finance and Administration.

November’s decline in the labor force is not encouraging, said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville.

“You certainly like to see the unemployment rate continue to drop, but it would be better if employment was increasing rather than seeing the labor force number be a little weak,” Deck said.

Most of the state’s employment growth is in Northwest Arkansas, Deck said.

“The rest of the state is roughly canceling itself out,”Deck said. “Central Arkansas is a little positive. Fort Smith is a little bit negative. Of course, we want to see Northwest Arkansas get back on track, but we really want to see broad-based growth across the state.”

Pakko said he expects the annual revision of employment data that is released every March to show more positive results for the state. On the basis of some currently available regional statistics, Pakko said, he expects the March revision to show that Arkansas has about 13,000 more jobs than the November report indicates.

Six employment sectors in Arkansas showed job increases in November compared with November 2011, led by the trade, transportation and utilities sector with 6,900 more jobs, Friday’s report said. The sector also includes retail and wholesale trade jobs.

Five sectors reported declines in the number of jobs in November compared with November 2011. The biggest decline came in construction, where 3,700 jobs were lost compared with the previous year.

A federal economic report also released Friday included some encouraging construction data.

Home builders in south Arkansas are at the highest level of confidence of any time in the past six years, according to the Federal Reserve Bank of St. Louis’ quarterly report on the economic conditions in Arkansas. The report, released Friday, also said housing construction in Arkansas is “outpacing last year’s activity,” but it has not been on pace this year with home construction nationally.

Arkansas was one of 45 states that saw unemployment rates drop in November. But Arkansas also was one of 20 states to report a one-month decline in the number of nonfarm payroll jobs. There were 1,100 fewer nonfarm payroll jobs in Arkansas in November compared with October, but there were 9,500 more jobs in November compared with November 2011.

Nevada continued to report the highest unemployment rate in the country at 10.8 percent, followed by Rhode Island at 10.4 percent; California at 9.8 percent; New Jersey at 9.6 percent; and North Carolina at 9.1 percent.

North Dakota again had the lowest unemployment rate at 3.1 percent last month, followed by Nebraska at 4.4 percent; South Dakota at 4.4 percent; Iowa at 4.9 percent; and Utah and Wyoming, tied at 5.1 percent.

Front Section, Pages 1 on 12/22/2012

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