State jobless rate ends ’12 stagnant

Saturday, January 19, 2013

— The unemployment rate in Arkansas rose to 7.1 percent in December from 7.0 percent in November, the U.S. Bureau of Labor Statistics said Friday.

The slight increase in the unemployment rate is statistically insignificant. The statistical margin of error is 0.9 percent, according to the Bureau of Labor Statistics in Dallas.

But the overall outlook for employment and Arkansas’ economy has been on a downward trend for eight months, said Michael Pakko, chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock.

Arkansas’ labor force has steadily declined since April, when there were 1,390,200 workers. The labor force is the sum of the employed in the state and the unemployed. Until April, there had been a gradual increase in the labor force since July 2011.

In December, there were 1,355,000 people in the labor force, a drop of 35,200 since April.

“Things have pretty much stagnated since [April],” Pakko said. “And just over the course of the past six or seven months, much of the increase in the labor force that we had seen since January 2010 has been erased.”

It is difficult to determine exactly why the labor force has declined since April, Pakko said.

“The common explanations are that people are discouraged and stopped their job searches altogether,” Pakko said. “It could be that some are going back to school or others are choosing early retirement. But it’s certainly a positive trend.”

For the state to return to a sense of economic growth, there would need to be an increase in the labor force of about 1 percent a year and the unemployment rate declining at the same time, said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville.

“But it certainly is not fair to make too much of [the decline in the labor force],” Deck said. “I don’t think the fundamental economic situation in the state has changed enormously from the last three or four months.”

The state is not in a recession but it also is not in an expansion, Deck said.

What is disconcerting, Deck said, is that Arkansas isn’t recovering from the national recession in 2008-2009 as well as the rest of the country is.

“Particularly when we’re looking at such a tepid national recovery, the fact that we’re not fully engaged in the tepid national recovery is not good news for the state,” Deck said. “I would have hoped that [Arkansas] would have a bit more of a bump after such a steep decline.”

Seven industry sectors in the state reported increases in jobs in the past 12 months and four reported declines.

The largest increases were in the leisure and hospitality sector and the educational and health services sector, which each added 3,600 jobs from December 2011 to December 2012.

The biggest decline came in the construction sector, which lost 2,700 jobs over the same period.

Construction has an apparent effect on other areas of the economy, Deck said.

If residential construction, for example, is doing well, it helps manufacturers that must supply materials, Deck said. The transportation sector benefits as it gets the materials to the job site, Deck said. And when people are buying new houses, they also buy new furniture and appliances, which benefits retail sales, Deck said.

“Construction is obviously weak in the state,” Deck said. “Why it is so weak, I don’t know. Obviously we just passed a tax for roads, so it could turn around quickly.”

Nationally, 22 states reported decreases in their unemployment rate, 16 saw increases and 12 were unchanged.

Nevada and Rhode Island had the highest unemployment rates in the country at 10.2 percent each, followed by California at 9.8 percent, New Jersey at 9.6 percent and North Carolina at 9.2 percent.

North Dakota again had the lowest unemployment rate at 3.2 percent last month, followed by Nebraska at 3.7 percent, South Dakota at 4.4 percent and Iowa and Wyoming at 4.9 percent each.

Business, Pages 29 on 01/19/2013