Arkansas’ jobless rate falls to 5% in February, leaving experts puzzled
Posted on Saturday, March 29, 2008
Unemployment in Arkansas fell to 5 percent last month from 5. 6 percent in January — the largest one-month drop in 30 years.
The reason for the big drop puzzles observers.
“I honestly don’t have a wonderful explanation [for the decline ],” said Cheryl Abbott, a regional economist in Dallas with the U. S. Bureau of Labor Statistics. “The reason is not identifiable, at least not at this point in time.” There were several hints in the unemployment statistics last month, but it’s hard to draw firm conclusions.
Arkansas had 68, 500 unemployed people in February, a drop of 8, 300 from 76, 800 in January. But Abbott said that decline “could be an issue of seasonality.” Kimberly Friedman, spokesman for the Arkansas Department of Workforce Services, said some people who worked during the Christmas shopping season, such as students, could have returned to the classroom and aren’t looking for work. Some people could have moved, Friedman said. Abbott also noted that construction always has a decline in workers in winter months.
But Abbott and Friedman said the decline in the number of unemployed doesn’t necessarily mean that people have left the work force and are no longer seeking work.
It isn’t fair to read too much into the big drop, Abbott said.
Previous years’ unemployment rates have been revised to account for adjustments for seasonality, population and estimating the bureau’s economic model, and February’s statistics will be revised with the rest of 2008 in January of 2009.
The monthly unemployment rates “can be volatile,” said John Shelnutt, the administrator of economic analysis and tax research for the state’s Department of Finance and Administration.
The unemployment rate is a lagging indicator of the health of the economy, Shelnutt said. In other words, changes in unemployment rates usually lag behind other evidence of the economy’s condition.
And since some economists believe the country is heading into a recession, if Arkansas follows the national trend, there are indications that the unemployment rate also would rise, Shelnutt said.
The bottom line, Abbott said, “is we’re just going to have to take a wait-and-see attitude on all of this.” If the unemployment rate stays near 5 percent in March and the other statistics that go into calculating the rate — the size of the labor force and the number of employed and unemployed Arkansans — remain stable, then it could indicate a positive change in Arkansas ’ economy, Abbott said.
Oklahoma’s unemployment rate also dropped 0. 6 percentage point in February, Abbott said. The other states in the Southwest region — Louisiana, New Mexico and Texas — reported unemployment rate percentagepoint declines ranging from 0. 2 to 0. 4, Abbott said.
The national unemployment rate also fell in February, to 4. 8 percent from 4. 9 percent in January. Michigan had the highest unemployment rate in February at 7. 2 percent. Texas’ rate of 4. 1 percent was the lowest in the country.
Eight of the 11 industry sectors in Arkansas recorded increases in employment in February, two showed a decline, and one was unchanged.
Government had the largest increase, with 3, 900 additional workers in February as nonteaching employees returned to public schools and universities.
The leisure and hospitality sector added 1, 800 jobs, most in the accommodations and food services category. The opening of horse racing at Oaklawn Park in Hot Springs contributed significantly to this increase.
There was a seasonal gain of 1, 400 jobs in the educational and health services sector, with most of the increase coming in educational services as private schools reopened after the Christmas break.
The professional and business services sector grew by 1, 100 jobs. The administrative and support services category accounted for 700 of those jobs.
There were 500 more jobs in construction in February compared with January. Specialty trade contractors, including plumbers, electricians and painters, picked up 300 of those 500 additional jobs.
Two sectors, natural resources and mining and financial activities, grew by 100 jobs last month. The natural resources and mining sector had 10, 100 jobs in February, an increase of 16 percent or 1, 400 jobs in the past year.
Jobs in information were unchanged in February.
The trade, transportation and utilities sector lost 600 jobs from January to February. All of those jobs and more came in the retail trade category, which lost 1, 000 jobs after the end of the Christmas shopping season.
Manufacturing continued its decade-long decline with a loss of 300 jobs in the month.
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