Little Rock Burgundy Book: Unemployment Rate Falls to Lowest Level Since 2008

Unemployment in the Little Rock Zone of the Federal Reserve Bank of St. Louis has fallen to its lowest level since the Great Recession, but the near-term outlook among business contacts remains one of cautious optimism.

Fewer than half of business contacts surveyed by the St. Louis Fed in August expected economic conditions to improve in the second half of 2014.

The information was published Sept. 23 in the latest quarterly release of the Burgundy Books, a publication of the St. Louis Fed. The reports offer comprehensive economic information for each of the St. Louis Fed’s four zones: St. Louis, Little Rock, Ark., Louisville, Ky., and Memphis, Tenn.

The Little Rock Zone of the St. Louis Fed includes the majority of Arkansas, except the northeast part of the state. The population in the zone is approximately 2.5 million people, including the 710,000 who live in the metropolitan statistical area (MSA) including Little Rock.

The zone’s unemployment rate averaged 6.2 percent in the second quarter, matching the national rate. In the MSAs including Fayetteville and Little Rock, unemployment rates were below the national average, and nonfarm employment grew in the second quarter. However, employment declined slightly in the MSAs including Fort Smith and Texarkana.

Manufacturing employment rose at a modest pace in Arkansas in the second quarter after declining in the first quarter. Growth of employment in Arkansas’ transportation industry remained slightly positive in the second quarter.

In contrast to the national picture, house prices and single-family building permits declined in the second quarter in a majority of the zone’s MSAs. The commercial office market remained stable in the Little Rock MSA. The retail market showed signs of distress, experiencing negative absorption, declining asking rents and increasing vacancy rates.

Per-capita personal income growth in Arkansas trailed the nation’s growth in the second quarter. Since the middle of 2009, growth of auto and student loan debt balances has roughly offset the decline in mortgage and credit card balances in the Little Rock Zone.

Compared with the previous three months, Arkansas banks experienced an uptick in profitability (return on average assets) and a reduction in nonperforming loans in the second quarter.

According to projections by the U.S. Department of Agriculture, Arkansas farmers should reap bumper soybean and rice crops in 2014.

View the entire Little Rock Zone report at http://research.stlouisfed.org/regecon/burgundybooks/14/09/BB0914LR.pdf.

An audio summary of the report is available at http://www.stlouisfed.org/newsroom/multimedia/audio/20140923-burgundybooks.cfm.

The next Burgundy Books will be released Dec. 19.