Fed report: Arkansas job market tight

The Arkansas economy is holding steady as it nears the end of a year marked by full employment and a tight labor market, conditions that continue to persist, according to a report issued Wednesday by the Federal Reserve Bank.

Job applicants are becoming more aggressive, reaching out to employers to assess hiring prospects, though companies are struggling to find highly trained workers needed for specialized jobs, especially in the skilled trades and technology sectors. “People with those skill sets are pretty much able to have their pick of positions,” Nathan Jefferson, a regional economist with the Fed, said Wednesday in discussing the Beige Book report.

Everywhere else, there are signs of labor struggles easing.

“We’ve gotten reports in Arkansas that some employers have had people reach out to them about positions, which is something that hasn’t happened in a while,” Jefferson said. “But labor markets are still tight, particularly in construction and transport.”

Arkansas’ agriculture sector has been riddled with hiring troubles as well, pushing farmers and producers to hire workers with temporary visas to fill the gaps during harvest season. “Visa workers were really essential this year to meet labor demand,” Jefferson said. “It’s been particularly difficult to get workers into the fields.”

Prices continue to rise, threatening industry profits, while consumers resist the increases by seeking lower-cost options. “A couple of common cost increases stood out: rising food prices and rising fuel prices,” the report said.

As a result, consumer buying behavior is shifting. “People are switching to lower-priced goods and moving away from the highend stuff,” Jefferson added.

Businesses are paying more for parts and equipment but are struggling to pass along those increases. “There is an affordability issue for a lot of different sectors,” Jefferson said Wednesday. “Companies are not able to increase prices like they have previously.”

Household budgets, for most of the year, have been under pressure from rising interest rates and inflationary price increases. Those factors continue to persist and appear

to be showing up in the banking sector.

“Banking contacts saw some signs of consumer finance stress increasing but reported that overall credit risk remained moderate,” the Fed reported.

Home sales remain robust in Northwest Arkansas, with the corridor continuing to produce at some of the highest levels in the region. Little Rock home sales were down 10% while median

home prices remain stable. Sales are tumbling because potential buyers are finding fewer choices in the market, Jefferson said, noting that homebuilding has slowed.

Rising material costs also are factoring into housing decisions.

“A real estate contact reported that due to elevated construction and financing costs, commercial buyers are purchasing land with plans to wait 12-24 months before beginning to build,” the Beige Book reported.

Auto dealers and related sectors have dampened hopes

for a recovery over concerns related to the ongoing autoworkers strike. “We didn’t see effects right away,” Jefferson said, “but this is something that has auto dealers a little more pessimistic moving forward and it might affect inventories going into next year.”

Manufacturers in Arkansas reported an uptick in production though they are holding the line in adding workers as a way to hold costs in check. “Manufacturers have been telling us they are fully staffed up,” Jefferson said. “Orders may be

picking up but they are still slower than they were a year ago. Manufacturers are trying to hold their costs down.”

The regional reports covers all of Arkansas and parts of Illinois, Indiana, Kentucky, Missis- sippi, Missouri and Tennessee in an examination of economic factors that include employ- ment and wages, prices, consumer spending, manufacturing and nonfinancial services.

The Arkansas region includes the major metro areas of Louisville, Memphis and St. Louis.