January rate of joblessness holds at 3.7%
Revised report on Arkansas’ jobs environment less robust
Statewide unemployment held steady in January at 3.7% for the third consecutive month and was on par with the overall U.S. joblessness rate to open 2024, though economic observers noted Monday the Arkansas job environment is not as robust as previously reported.
The Arkansas Division of Workforce Services, which released the numbers Monday, also announced that the December 2023 unemployment rate was revised upward from the 3.4% previously reported to 3.7%.
January’s rate, combined with the upward revision in December, has heightened concerns that the job outlook is dimming. For example, last month’s unemployment rate is seven-tenths of a percentage point higher than in January 2023, and the state reported a drop of 17,700 nonfarm payroll jobs from December to January. Unemployment, as revised, also is up nearly a full point since May.
“A 3.7% rate is not horrible but I don’t like to see it trend in this direction,” Kendall Ross, executive director of the Center for Economic Development at the University of Arkansas-Fort Smith, said Monday. “We’re trending back to where we were pre-pandemic, and that’s a concern. Being up seven-tenths of a percent is concerning because we’re headed in the wrong direction.”
Unemployment hovered around 3.6% from October 2019 until February 2020, then ballooned as the pandemic led to business shutdowns, before the rate began to drop below 4% again starting in August 2021. Last year, unemployment in Arkansas dipped below 3% from February-May before beginning a steady climb to the 3.7% now reported for November, December and January.
“The new data shows that the number of unemployed dropped to just under 40,000 at its low point, rather than falling as low as 35,600 in the previously published data,” Michael Pakko, chief economist at the Arkansas Economic Development In
stitute, noted on his blog.
However, Pakko said Monday that a rate stabilizing at 3.7% remains below the 4% that is generally considered full-employment status by most economists.
“The very low unemployment rates that we saw last year have been somewhat revised away,” Pakko said. “On the other hand, while it looked like unemployment was rising over the second half of 2023, now it looks like it’s pretty much flat. And it’s the same with the labor force. The new trend that has emerged with the revised data is pretty much stagnation. Employment, unemployment and the labor force have changed very little over the past four to six months.”
The revisions date back to 2019, and unemployment statistics are adjusted as more complete data is reviewed under U.S. Bureau of Labor Statistics guidelines. The job declines reported Monday, however, raised concerns about the statewide job outlook. Manufacturing, a foundation of the Arkansas economy, has shed 3,000 workers since January 2023, including the loss of 400 jobs last month.
Charisse Childers, director of the Division of Workforce Services, said the state’s civilian labor force increased by 18,404 over the year and 8,529 more Arkansans found work in the same period. “There’s more people unemployed since last January, but that tells us there’s more people looking for work,” she said.
Job growth in Arkansas is slowing, according to Pakko, who noted on his blog that the two-year growth rate of 4% from December 2021-December 2023 was revised down from the previously reported 4.4%.
“None of this is unexpected given the widespread anticipation of a slower economy due to the Fed’s higher interest rates,” he said Monday. “There’s been a slowdown but nothing to indicate an outright contraction on the horizon. An unemployment rate below 4% is nothing to panic over — it’s considered normal more than anything else.”
Workforce Services reported the shrinking job market in January was primarily seasonal, with the largest drop of 4,200 workers in trade, transportation and utilities.
“I know we’re saying a lot of that is seasonal, but 17,700 jobs (lost) is a pretty significant number,” Ross said. “If we stabilize at 3.7%, it’s not a bad place to land but, hopefully, January and February will be the last of this trend.”
Pakko noted on his blog that certain job sectors typically lose workers in January, and he reported an increase of 2,700 jobs statewide after seasonal adjustments.
Arkansas’ labor force is problematic as well, with Monday’s report showing a participation rate of 57.5%, flat with December and improved slightly from 57.3% in January 2023. “The labor force is increasing, but it’s not increasing significantly — we’re still not where we need to be with the labor force participation rate,” Ross said, adding that 58% participation would be adequate while 60% would be ideal. The U.S. rate is 62.5%.
Arkansas’ labor force rose by 506 from December, and employers added 460 jobs.
Construction was the only major sector to generate job gains from month-to-month, adding 700 workers in January. “It’s good to see construction up,” Ross said. “Construction added 7,000 jobs year-over-year, and that’s a really good sign.”
From December to January, trade, transportation and utilities dropped by 4,200 workers; professional and business services lost 3,800 jobs; government was down 3,100; private education and health services decreased by 2,700; and leisure and hospitality sliced 2,100 employees.
For the year, construction gained 7,100 jobs; private education and health services added another 5,502; and government was up 2,900.
Big losses were recorded in professional and business services, with a decline of 3,100 workers, and in manufacturing, which shed 3,000 jobs.
Unemployment rates were higher in January in four states, lower in two states and stable in 44 states and Washington, D.C., according to the Bureau of Labor Statistics. Over the year, Arkansas was one of 25 states reporting joblessness-rate increases. Six states had decreases, while 19 states and D.C. saw no change.
North Dakota had the lowest joblessness rate in January at 1.9%. Nevada had the highest unemployment rate of 5.3%.