Arkansas’ jobless rate continued to improve in February, dipping to 4.5% for the 10th-consecutive monthly decline since spiking to double digits in April. The state unemployment rate is inching closer to the 3.8% registered in February 2020 before the pandemic ravaged the economy.
The Department of Workforce Services said Friday that unemployment fell from 4.6% in January. The U.S. unemployment rate also fell one-tenth of a point in February to 6.2%.
“The rate is going in the right direction and getting lower,” state Commerce Secretary Mike Preston said Friday. “We’ve been going downward fairly consistently.”
Arkansas’ civilian labor force declined by 12,775, with 10,820 fewer employed and 1,955 fewer unemployed Arkansans.
While optimistic about the continued improvement in the unemployment rate, Preston and other economic officials are concerned about the labor force decline.
“We are heartened to see the sustained economic recovery occurring as pandemic numbers hopefully subside,” said Jay Chesshir, president and chief executive officer of the Little Rock Regional Chamber of Commerce.
However, “Our reduced labor force participation continues to be a bit troublesome, especially in light of the significant new jobs coming online over the next several months,” he said. “We expect to see even more job growth, higher labor force participation and economic prosperity throughout the remainder of 2021.”
On Friday morning, shortly after the unemployment rate was announced, Preston joined the governor and economic development officials in Hot Springs to announce that the FiberPro company is investing $3.1 million to create 70 jobs over the next three years.
“It might be hard right now under current conditions for them to fill those 70 jobs,” Preston said.
Labor force participation indicates how many potential workers are actively seeking employment.
Today, Preston said, potential workers are sitting on the sidelines and seem content to continue receiving unemployment benefits, especially with the extra $300 weekly federal benefit that has been extended to September.
“There’s a compelling reason to be on unemployment,” Preston said.
“The vast majority of people want to go back to work and make more than that, but there’s still a group of people who know the federal assistance can carry them to September, so why bother even looking for work right now.”
WalltetHub, which analyzes national employment and other key financial issues, distributed a report Friday ranking states by the strength of their bounce-back in employment. Arkansas ranked 16th-best nationally.
Michael Pakko, state economist with the Arkansas Economic Development Institute, said Friday’s report was lukewarm overall.
“There’s nothing to be terribly excited about, but there’s nothing disappointing either,” he said. “It’s a story that the recovery continues to slog along.”
The Workforce Services Department said job gains were posted in four of 1o sectors. Government led the way with 2,100 jobs; professional and business services gained 2,000; education and health services added 900 jobs; and other services added 900 workers.
The number of unemployed Arkansans has declined from a peak of more than 137,000 in April, when the pandemic was raging, to 61,600 in February. Household employment was down by 10,800 in February from January. Total employment is down more than 18,000 from a year ago.
Nonfarm payroll jobs rose 500 from January to February.
The household and payroll numbers were disappointing because there generally is a lift from January to February, Pakko said.
Likewise, three sectors that have experienced a steady and robust recovery also dropped jobs in February: Construction was down by 1,400, retail trade lost 700 jobs ,and the leisure and hospitality sector suffered 1,300 net job losses, with the restaurant industry losing 2,100 of those.
“Typically in February you’d begin to see a seasonal rebound, so that was a little disappointing,” Pakko said. “But I would expect those sectors to rebound in March.”
The downturn in those industries can be attributed mostly to the winter storms that slammed Arkansas in February, the economist said.
Overall, Pakko said, the trend is good, but it’s going to take time to rebound from the shellacking the economy has taken over the past year.
“We’re on a path to slow recovery and that’s not unusual for labor markets — it takes some time,” Pakko added. “I think the negatives that you see in this report are just little bumps in the road.”