State joblessness at 4.5%
Posted on Saturday, August 16, 2008
Unemployment fell half a percentage point to 4. 5 percent in Arkansas last month, the lowest level since April 2001, the U. S. Bureau of Labor Statistics said Friday.
Experts say the rate is good news, but they are at a loss as to why joblessness has dropped.
The lowest unemployment level in Arkansas history was 4. 1 percent in September 2000, according to the bureau.
One might suspect that natural-gas exploration in the Fayetteville Shale in north-central Arkansas is contributing to the lower rate, but the main categories that would demonstrate that expectation aren’t doing extremely well, said John Shelnutt, administrator for economic analysis and tax research for the state Department of Finance and Administration.
“The [natural resources and ] mining sector, which includes the [Fayetteville Shale ] play, is still the fastest-growing sector percentage-wise, but it is not enough to account for this large [of a drop in unemployment ],” Shelnutt said.
There simply isn’t a good explanation, he said.
Arkansas’ unemployment rate is well below the national rate of 5. 7 percent.
Since January, Arkansas’ unemployment rate has been below the national rate. And for the past three months, it has dropped while the U. S. rate has been rising.
Arkansas had the second-biggest one-month decrease in unemployment in the country, behind West Virginia’s drop of 0. 8 percentage point. And Arkansas had the only significant 12-month decline in unemployment in the country, with the unemployment rate falling 1 percentage point from 5. 5 percent last July.
“This is great news for Arkansas,” said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville.
But it isn’t easy to determine why the unemployment rate has dropped so significantly, economists said.
Arkansas has had an increase of 7, 400 jobs — about 1. 4 percent of the state’s nonfarm work force — since July last year, Deck said.
In the past year, government, the professional and business services sector and the educational and health services sectors have done well in the past year, Deck noted.
“So you’ve got to look at those sectors as being strong in Arkansas and one of the reasons why we’re seeing unemployment decline,” Deck said, adding that manufacturing, construction and the trade, transportation and utilities sector have lost jobs in that period.
Shelnutt noted that “construction came in less negative on a year-ago comparison,” Shelnutt said. There were only 200 jobs lost in construction in the past 12 months.
Two of the neighboring states have lower unemployment rates than Arkansas’.
Louisiana’s rate was 3. 9 percent and Oklahoma’s was 4. 1 percent.
The other four contiguous states had higher unemployment rates, including Texas at 4. 7 percent, Missouri at 6. 4 percent, Tennessee at 6. 9 percent and Mississippi at 7. 9 percent.
Oddly enough with the state’s unemployment rate falling, there were 17, 000 fewer nonfarm payroll jobs in Arkansas in July than in June, according to the monthly survey of employers conducted by the Arkansas Department of Workforce Services. That accounts for 1. 4 percent of the state’s jobs.
There are several factors that explain the apparent discrepancy.
The unemployment rate is calculated from two separate surveys, said Cheryl Abbott, a regional economist with the Bureau of Labor Statistics in Dallas.
A relatively small monthly survey of Arkansas households focuses on people and is seasonally adjusted, taking into consideration expected changes, Abbott said.
An extensive polling of employers in Arkansas focuses on jobs — not people — and is not seasonally adjusted, Abbott said.
The job count also includes full-time and part-time jobs. So if someone who worked two jobs lost one of them, he would still be considered employed.
The job count also does not include self-employed Arkansans or those working on a farm, Abbott said.
“A lot of this is seasonal,” Deck said. “You have to be very careful watching month to month, in terms of a decrease.”
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