State’s unemployment rate for December rises to 3.4%

Statewide unemployment ended 2023 the way it began, at 3.4%. Arkansas endured a bumpy pace over the year, with the joblessness rate falling to an all-time low in the summer before rising for five consecutive months to end the year.

December’s report, released Tuesday, registered unemployment up from 3.3% in November yet still below the U.S. rate of 3.7% recorded last month.

The year-end spike is not setting off alarms for state officials and economic observers, who remain optimistic about the state’s overall job performance in 2023.

“Even though we’ve seen a little bit of weakening in the second half of the year, it really hasn’t zapped the strength we saw in the first half,” Michael Pakko, chief state economist at the Arkansas Economic Development Institute, said Tuesday. “At this point we’re just experiencing some ups and downs. We’re not seeing any kind of a contraction or any serious recessionary signal at this point.”

The Arkansas Division of Workforce Services reported Tuesday that 3,638 fewer Arkansans were employed in December compared with November and about 2,500 more Arkansans were searching for jobs and receiving unemployment benefits last month.

Over the year, from December 2022 to December 2023, Arkansas added 18,263 jobs while dropping 446 workers.

“On the one hand, it is the fifth consecutive increase in the number of unemployed and the unemployment rate simultaneously,” Pakko said of the December report. “When you put that many months together, it does establish a trend.”

“At the same time, if you look at it from the perspective of the entire year, we’re really where we were at the end of the prior year. Unemployment reached record lows this year, and it’s just bounced back to where it was at the beginning of the year,” he said. “The unemployment rate hasn’t changed, the number of unemployed has barely budged, and we ended up with an increase of more than 18,000 additional employed. That is a positive outcome for the year.”

Arkansas Commerce Secretary Hugh McDonald said officials are pleased with the state’s jobs record.

“From an overall employment standpoint, 3.4% is still very robust employment,” McDonald said Tuesday. “The job market in the state is still strong. We’re still up from last year and on an upward trend.”

“Our job market is still pretty strong. There’s no need to panic at all,” he said. “I’ll get worried if it gets up to 4.5%, but there’s still more people talking about growth than there is the opposite.”

U.S. consumer confidence, a reflection of business conditions and sentiment about jobs, ticked up nine points in December from November and was spread across all ages and income groups, indicating that workers and employers have an optimistic economic outlook.

“December’s increase in consumer confidence reflected more positive ratings of current business conditions and job availability, as well as less pessimistic views of business, labor market, and personal income prospects over the next six months,” Dana Peterson, chief economist at The Conference Board, said in announcing the findings.

Labor force participation in Arkansas increased twotenths of a point over the year while the overall labor force added 18,709 Arkansans actively seeking work. Labor-force participation in December declined by 1,147 to dip to 57.6%. For 2023, however, participation was up twotenths of a point.

“The labor market weakened a little bit toward the end of the year,” said Kendall Ross, executive director of the Center for Economic Development at the University of Arkansas at Fort Smith. “There’s a little bit of inconsistency, but we’re seeing gains from where we were a year ago. A little bit of a weakening in the labor market is not that bad.”

Unemployment has been on a steady march upward since the summer, when the joblessness rate dropped to a historic low of 2.6% for June and July. Compared with December 2022, the state had 446 more unemployed workers and ended last year with 47,798 jobless Arkansans.

“Overall, I don’t think there are any significant surprises in the report,” Ross said. “We’re still competitive with a number of states, and we’re still below the national average, and that is all good.”

Most of the unemployed workers were added in the second half of 2023; from January through July, the state dropped 11,000 from the unemployment payouts and reached an all-time low of 35,624 unemployed. That reversed beginning in August.

“The last three or four months are a little disappointing, but I still feel the economy is robust and the fears of a recession seem to be waning,” McDonald said. “We still have some jobs in the pipeline, and the people we talk to still feel good about the economy.”

Manufacturing rebounded in December, adding 2,300 workers from November. Over the year, however, manufacturing dropped 1,200 jobs and recorded job losses for five consecutive months before halting the trend in December. Manufacturing is a cornerstone of the state economy.

“I’m not sure that they’re out of the woods yet — that’s a sector that could be affected by high interest rates, but it was good to see a surge in December,” Pakko said.

Manufacturing generated the largest job gains in December. Private education and health services gained 1,800 jobs; trade, transportation and utilities picked up 1,700 workers; construction was up 700 jobs.

Leisure and hospitality, one of the biggest job winners over the year, dropped 3,700 jobs in December as travel and spending dipped during the Christmas season. Professional and business services lost 1,200 jobs in December.

For the full year, private education and health picked up 9,200 workers; construction gained 7,600; and leisure and hospitality rounded out the top three by adding 3,500 workers.

Trade, transportation and utilities took the biggest hit in 2023, shedding 6,100 workers, far outpacing the loss of 1,300 jobs in information services and 1,200 in manufacturing.

Twenty-four states reported unemployment rates lower than Arkansas in December, and the nation’s lowest was 1.9% in Maryland and North Dakota. Nevada reported the top rate at 5.4%, and California reported a rate of 5.1%. They were the only states with a joblessness rate above 5% at the end of the year.