LITTLE ROCK — Northwest Arkansas’ economy is recovering rapidly, adding jobs and businesses at a rate that outpaces its peer regions, according to a study released Thursday and prepared for the Northwest Arkansas Council, a nonprofit organization that promotes the region.
The report says the region did not suffer as badly as many regions did in the recent recession, and has rebounded quickly.
“We see Northwest Arkansas just blowing away our competitor regions,” said Kathy Deck, director of the Center for Business and Economics at the Sam M. Walton College of Business at the University of Arkansas at Fayetteville.
“We are an employment generating powerhouse,” she said.
On the negative side, she said, the region continues to lag peer regions in the number of college graduates.
Peer regions chosen for the study were Tulsa, Knoxville, Tenn.; Huntsville, Ala.; Omaha, Neb./Council Bluffs, Iowa; and the greater Kansas City area. Of those, Huntsville was the closest in population to Northwest Arkansas at 425,480 in 2011. The Kansas City metropolitan statistical area was the largest at just over 2 million.
“While the national recession affected Northwest Arkansas substantially, the region has been able to weather the effects and re-emerge as an economically vibrant area,” the report said.
Mike Harvey, chief operating officer for the Northwest Arkansas Council, noted that the region has the lowest crime rate of any of the peer communities and that quality-of-life issues such as commuting times are low compared with other communities.
In recent weeks, Harvey said, prospective regional investors have dropped. He attributed that to uncertainty related to the November election and to the “fiscal cliff” that Congress and President Barack Obama face in dealing with mandated cuts to the federal budget, unless an alternative plan is adopted.
“They really kind of put on the brakes,” he said of the prospects, but added that local businesses are “getting on with business in this region.”
Deck said the region recovered from the housing collapse faster than peer regions.
“All we had to do was stop building houses for a little while to get back to where we needed to be,” she said. “Our [home] values went down. I don’t want to sugar-coat this.”
Among the key findings in the report:
From 2000 to 2012, the region added 54,700 jobs, an increase of 35 percent, and weathered the recession better than the state and the nation.
Since the end of the recession, the region has made “remarkable strides to recover from the economic slump and in some instances has surpassed pre-recession peaks.”
Northwest Arkansas has the second-lowest unemployment among its peer regions selected by the report, behind the Omaha-Council Bluffs region.
Growth sectors in Northwest Arkansas included professional and business services, education and health services and leisure and hospitality businesses.
Professional and business services added 14,600 jobs since 2000, including 2,000 jobs from June 2011 to June 2012.
Education and health services added 10,500 jobs since 2000, growing from 13,200 to 23,700, including 1,400 jobs from June 2011 to June 2012.
Leisure and hospitality businesses, which encompass cultural, entertainment and recreational activities, added 9,600 jobs since 2000, including 1,700 from June 2011 to June 2012.
Among sectors that are considered to be stable — trade, transportation and utilities, which include wholesale and retail trade, warehousing, transportation and utilities — account for the largest share of Northwest Arkansas employment, with 22 percent of the jobs. This group added 1,000 jobs from June 2011 to June 2012 and has added 14,300 jobs since 2000.
In sectors that are considered “bubble sectors” because of frequent fluctuations, including construction, mining and logging, job growth was rapid in the first half of the last decade, reaching a peak of 12,900 in mid-2006. This group declined rapidly after that, leaving a net gain of only 1,000 jobs from 2000 to 2012. The June 2011 to June 2012 job numbers were unchanged.
The financial activities sector, which includes financial transactions, insurance and real estate, saw job growth peak in mid-year 2007 at 8,900. The sector has since declined to 7,200 jobs and was unchanged over the past year.
Information technology jobs, which account for 1 percent of Northwest Arkansas employment, declined slowly since 2000 but gained 100 jobs yearover-year.
The report notes that per capita incomes in Northwest Arkansas tend to be higher than those in the rest of the state, but still lag its peer regions and the nation.
Business, Pages 27 on 09/28/2012