Statewide unemployment dipped to 3.6% in February, reversing three consecutive months of the rate holding steady at 3.7% and producing the first monthly decline since June.
U.S. unemployment, by contrast, ticked up to 3.9% in February from 3.7% in January.
Arkansas’ civilian labor force declined by 260 in February, the Arkansas Division of Workforce Services reported Friday. The number of unemployed Arkansans dropped by 1,365, while 1,105 more Arkansans gained jobs compared with January. The labor force participation rate declined one-tenth of a percentage point to 57.4%.
“A 3.6% unemployment rate is not troubling,” Arkansas Commerce Secretary Hugh McDonald said of Friday’s report.
February marked the fourth consecutive month of employment growth, according to Michael Pakko, lead economist at the Arkansas Economic Development Institute.
Employment has climbed by 15,400 jobs, just about 1.1%, over the past year but falls a little short of the overall U.S. growth rate of 1.8%.
That growth demonstrates a hardy economy that continues to indicate growth, Pakko said Friday.
“The labor markets are showing signs of resilience,” Pakko said. “We’ve been seeing what appeared to be a slowdown in employment growth and an upward creep in unemployment, but those were offset a little bit in February.”
The number of unemployed sagged to 49,446 in February, below 50,000 for the first time in several months. “That might just be a fluke but it’s certainly not bad news for unemployment to go down,” Pakko said.
It has been four years since the peak-employment of February 2020, just before the pandemic led to business closures and significant job losses. Since that high point, Arkansas employment has grown 5.2%, compared with 3.6% for the U.S.
February’s dip to 3.6% was the first month-over-month drop since unemployment began increasing after June, which recorded an all-time record low of 2.6%.
“We’re just carrying along, real nice and stable, which is great,” Kendall Ross, executive director of the Center of Economic Development at the University of Arkansas — Fort Smith, said Friday. “Steady is good. This is pretty solid; if we can hang out here for a while we’ll be fine.”
Sectors with the biggest monthly job gains were private education and health services, which added 2,800 workers; professional and business services increased by 2,500; government added 2,400 positions; and leisure and hospitality was up 2,300 jobs.
Trade, transportation and utilities dropped 2,000 workers and manufacturing lost 1,000 jobs, continuing a downward cycle from January when the sector shed 400 workers. Manufacturing lost the most jobs year-over-year and was down 4,300 workers from February 2023.
“Manufacturing is in decline so hopefully that levels out pretty soon,” Ross said. “It’s going to be a real problem if it continues to head in that direction.”
The sector’s woes, Pakko said, could be a combination of higher interest rates and inflation strangling growth opportunities by sidelining potential investments to spur growth.
“Manufacturing is a sector that requires a lot of capital investment and that often requires financing,” he said. “In this environment where you have higher cost of materials and higher interest rates when you need money for retooling, that kind of puts a damper on manufacturing. Capital investment is an important part of the equation.”
Labor-force participation, which has been troubling in the post-pandemic economy, slipped one-tenth of a point to 57.4% in February and is flat compared with a year ago. The rate remains “stubbornly low,” McDonald said.
“We need to move that number and get more people back into the workforce,” he said.
At the same time, state officials are getting indications hiring and wage pressure on businesses have slackened. “I don’t hear anecdotally what I was hearing a year ago — when employers had to pay a lot more and had a hard time finding people,” McDonald said. “Those challenges are still there but they’re not as acute as they were a year ago.”
For the full year, private education and health services added 7,800 jobs and construction increased by 6,700.
Across the nation, unemployment rates were higher in February in 3 states: Rhode Island, Connecticut and Washington. Along with Arkansas, monthly unemployment declined in Tennessee, Wisconsin and Massachusetts.
North and South Dakota produced the nation’s lowest rates at 2% and 2.1%, respectively, trailed by Vermont at 2.3%. Nevada, consistently the worst in unemployment, remained at the bottom again in February at 5.2%.
