Editor’s note: Kathy Deck, the author of this guest commentary, is an economist with the University of Arkansas’ Walton College of Business Center for Business & Economic Research.
Opinions, commentary and other essays posted in this space are wholly the view of the author(s). They may not represent the opinion of the owners of Talk Business & Politics.
The year 2015 was a good one for the Arkansas economy, with trends that portend more success into 2016. The most recent estimates suggest that the state gained 19,500 jobs from December 2014 to December 2015.
Even better news is that the job growth was well-distributed among the construction and service sectors, with many different industries experiencing gains. The only sectors of the Arkansas economy that had less employment at the end of the year were manufacturing, logging and mining, and local government, while much of the decline in the manufacturing and logging and mining sectors was related to the downturn in global energy prices.
Jonesboro, Northwest Arkansas and Central Arkansas were the regional economies that drove much of the state’s economic success in 2015. Unsurprisingly, these were also the metropolitan areas that saw the largest gains in their service sectors.
The fastest pace of job growth was in Jonesboro, where employment grew by 3.1% from 54,800 in December 2014 to 56,500 in December 2015. The Jonesboro economy has been a consistent outperformer within Arkansas, accounting for 23% of net employment growth in the state over the past 10 years even though the area’s labor force represents less than 5% of the state total. The job growth in Jonesboro has come despite downward forces on manufacturing employment – services now account for more than 84% of nonfarm jobs.
NORTHWEST ARKANSAS’ SUCCESS
The steady increase in employment in Northwest Arkansas also continues to support overall economic success in the state. The region gained 4,800 jobs over the past year, despite well-publicized restructuring at the Walmart and Sam’s Club headquarters and consolidation among some suppliers.
Investments in tourism infrastructure, highways and the Razorback Greenway – along with the realization of planned growth in downtown amenities and residential and commercial real estate – kept the regional economy humming even as growth in its biggest employment sectors (trade and professional and business services) slowed. Additional construction projects for multi-family housing, arts and athletics will come to fruition in 2016 and beyond.
Finally, the most notable development in the Northwest Arkansas economy was the substantial per capita personal income growth in the region since 2010, putting the area at a standard of living better than the national average for the first time and further improving confidence in the area.
The year 2015 was a standout for the Central Arkansas economy. Gaining 3,800 nonfarm jobs, the Little Rock-North Little Rock-Conway metro area had its best year of employment growth since before the Great Recession. Increases in leisure and hospitality, construction and health services jobs led the way. The state’s largest metropolitan area ended the year 2015 with an unemployment rate of 4%, even as the region’s labor force grew at a brisk 2.8% and was at its highest recorded level during the year.
Central Arkansas represents more than a quarter of the state’s labor force, so even modest growth in the region is often the difference between economic progress and regress within the state.
FAVORABLE CONDITIONS FOR 2016
With these three economic engines in good working order, the overall economic situation in Arkansas is quite favorable for a healthy 2016. Investments in workforce education and training, health care, and physical infrastructure that have been made or are being made will continue to drive incremental improvements in prosperity.
The state’s economy is still subject to economic shocks due to global or domestic imbalances, but the fundamental trajectory of employment and income trends is positive. Continuing to identify sectors of strength and funding the strategic investments that keep them viable is the key for a nice, smooth ride.