Northwest Arkansas Ranked 26th Fastest-Growing Economy In U.S.

Northwest Arkansas’ business development and job production grew by a whopping 5.6 percentage points in 2013 — ranking the area as the 26th fastest-expanding economy in the U.S., according to new statistics released Tuesday by the U.S. Bureau of Economic Analysis (BLS).

The highly-watched BLS report from the U.S. Department of Commerce also spotlighted the fact that the Fayetteville-Springdale-Rogers area’s professional and business service sector saw the greatest economic expansion among the nation’s 381 largest metropolitan areas (MSAs) in 2013, increasing real Gross Domestic Product (GDP) growth by 3.33 percentage points.

That doesn’t surprise Kathy Deck, director of the University of Arkansas’ Walton College of Business Center for Business and Economic Research. She said she has been closely watching the region’s workforce growth for some time, and the BLS report further confirms the university’s own research.

“This is wonderful news, but it is consistent in what we are seeing in the (Arkansas) labor numbers and consistent with what we have been seeing in one of the key industries in Northwest Arkansas — the growth of the professional and business service sector,” said the University of Arkansas economist.

Deck added that over the past decade, jobs in this high-paying, fast-growing sector have grown more quickly than other sectors of the region’s economy. According to the most recent employment report from the state Department of Workforce Services (DWS), there are 129,400 professional and business service sector jobs on Arkansas payrolls, up 600 from just a month ago and 2,400 from the same period in 2013.

In the Fayetteville-Springdale-Rogers area, there are 41,600 payroll jobs in the professional and business service sector, up 1,000 from a year ago. Also, the DWS forecasts in its long-term workforce forecast that this “super sector” will add 12,548 additional jobs to the state’s economy by 2022.

“That sector now represents 20% of the employment in (Northwest Arkansas), when just a few years ago is was only 15%” Deck said. “I have said in the past that economies don’t change on a dime, but the rapid growth in this sector is really driving the (expansion) we have seen in this region.”

Overall, economic activity in most of Arkansas’s MSAs is expanding, except in Texarkana and Pine Bluff. For example, the Little Rock-North Little Rock-Conway and Fayetteville-Springdale-Rogers MSAs ranked among the nation’s top 100 in GDP growth in 2013, coming in at 65th and 97th, respectively.

However, the Little Rock area only grew year-over-year by 0.7%, ranking the state’s largest economy at 239th by percentage growth in the U.S. By comparison, the Little Rock economy generated $40.9 billion in GDP growth versus $23.8 billion of economic activity in Northwest Arkansas.

Additionally, the Jonesboro, Fort Smith, and Hot Springs MSAs also saw positive economic momentum in 2013, expanding their economies by 2.0, 1.8 and 0.8 percentage points, respectively. Texarkana and Pine Bluff, however, declined by 2.7% and 3.3%. The Memphis metropolitan area, which also includes West Memphis and other parts of Northeast Arkansas, contracted by 0.1 percentage points and ranked as the 46th largest metropolitan area by GDP.

Nationwide, Arkansas and the rest of the nation appear to be emerging from the drawn out Great Recession as real GDP increased in 292 of the nation’s 381 metropolitan areas in 2013, led by widespread growth in finance, insurance, real estate, rental, and leasing, nondurable-goods manufacturing, and professional and business services. Collectively, real GDP for U. S. metropolitan areas increased 1.7% in 2013 after increasing 2.6% in 2012.

Last month, the BLS reported that Arkansas’ economic base grew by 3% in the fourth quarter of 2013, pushed upward largely on the strength of the state’s blue collar manufacturing base.

Greg Kaza, executive director and economist at the Arkansas Policy Foundation, said the stand-out for Arkansas’ economy was the state’s non-durable manufacturing sector – which produces “soft goods” that are immediately consumed or last less than three years.

“That one really stands out in terms of growth,” Kaza said. “It is not really sexy, but it is really important for our state’s economy.”

NATIONWIDE STATS
Below are some additional highlights of the Bureau’s analysis of economic growth in the nation’s largest metropolitan areas.

• Finance, insurance, real estate, rental and leasing contributed 0.36 percentage points to U.S. metropolitan area real GDP growth in 2013. Growth in this industry accounted for more than half of real GDP growth in 61 metropolitan areas, and contributed more than one percentage point to growth in 55 metropolitan areas, most notably in Williamsport, Pa. (3.49 percentage points); State College, Pa. (3.02 percentage points); and Bloomington, Ill. (2.87 percentage points).

• Nondurable-goods manufacturing contributed 0.32 percentage points to U.S. metropolitan area real GDP growth in 2013. This industry contributed to growth in 273 metropolitan areas and contributed more than one percentage point to growth in 45 metropolitan areas. Strong contributions from this industry fueled growth in many areas, including in the nation’s fastest growing metropolitan area—Mount Vernon-Anacortes, Wash., which grew 10.6%.

• Professional and business services contributed 0.24 percentage points to U.S. metropolitan area real GDP growth in 2013. This industry contributed to growth in 245 metropolitan areas and contributed more than one percentage point to growth in 19 metropolitan areas. The largest contributions from this industry occurred in Fayetteville-Springdale-Rogers, Ark. and Janesville-Beloit, Wisc. (2.61 percentage points).

• Although natural resources and mining was not a major contributor to growth for the nation, this industry contributed to strong growth in several metropolitan areas. Mining in the Utica and Marcellus shale formations led to notable contributions to growth for natural resources and mining in Beckley, W.Va. (11.49 percentage points); Wheeling, W.Va. (8.50 percentage points); and Charleston, W.Va. (3.63 percentage points). Mining in the Niobrara shale formation contributed significantly to the 10.1 percent increase in total real GDP for Greeley, Colo.

• The government sector subtracted 0.12 percentage points from U.S. metropolitan area real GDP growth in 2013. This sector subtracted from growth in 292 metropolitan areas. The largest subtractions occurred in Hinesville, Ga. (4.12 percentage points); Jacksonville, N.C. (3.00 percentage points); and Warner Robins, GA (2.05 percentage points).