State jobless rate recedes to 8.2%

— While a dip in Arkansas’ unemployment rate hints at a turnaround, the state’s job market continues to be weaker than even a year ago.

Arkansas’ unemployment rate fell to 8.2 percent in October, down from 8.3 percent in September, the state’s Department of Workforce Services said Tuesday.

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The number of employed people was up 7,500 compared with September, and the number of unemployed people fell by 600.

The drop in the joblessness rate is the first since March, the department said.

Michael Pakko, state economic forecaster and chief economist for the Institute for Economic Advancement at the University of Arkansas at Little Rock, said the report gave him hope that a turnaround is under way.

But many indicators suggest that the job market remains sluggish.

John Shelnutt, administrator for economic analysis and tax research for the Arkansas Department of Finance and Administration, said he’s concerned that non-farm payroll jobs in October were down 1,200 compared with a year earlier. The year-over-year decline is the first for any month since April 2010, said Shelnutt, who cautioned that the numbers could be revised.

“It may not hold, but it’s disturbing to see it,” Shelnutt said.

Arkansas’ unemployment rate is up 0.3 percentage point since October 2010. The U.S. rate has fallen by 0.7 percentage point during the same period.

About 3,000 fewer people were employed in Arkansas last month compared with a year earlier.

Just seven states besides Arkansas had higher unemployment rates in October compared with October 2010, Pakko noted.

Nationally, the unemployment rate also fell 0.1 percentage point from September to October, to 9.0 percent.

Nevada, one of the states hardest hit by home foreclosures, had the highest unemployment of any state in October at 13.4 percent. North Dakota, with its energy boom, had the lowest at 3.5 percent.

In Arkansas, non-farm payroll jobs grew by 3,000 in October from September.

Some of the jobs, however, came from an increase in local government because of a ramp up at schools that happens every fall.

Pakko believes that the state is recovering slower than the nation this year because of transitory factors, such as floods in the spring and the drought this summer, and the resulting effects on agriculture.

One reason he believes this, he said, is because the state had been growing more than most states at the start of 2010.

“I’m perhaps more than usual open to the fact that this one-month down-tick in the rate may be a turnaround,” Pakko said.

Texas, another state whose unemployment rate is higher than last year, also was hit hard by drought in the summer, he said.

Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville, said she believes that lower educational levels and the mix of industries statewide are partly responsible for Arkansas recovering slower than the nation.

Several of the state’s manufacturing plants serve the housing market, which has yet to recover, she noted. For example, Whirlpool Corp. has said that it will close its Fort Smith plant, which makes refrigerators, by mid-2012. And weak demand for housing led Georgia Pacific this month to close its plywood and lumber operations in Crossett.

Deck said it’s worrisome that the state’s metropolitan areas aren’t creating jobs.

“The best you can say about all the major metropolitan areas is that they’re treading water,” she said.

Manufacturing jobs last month were down 6,400 from October 2010, the most of any sector. The loss, which affected non-durable goods production most heavily, was “related to multiple layoffs and business closures,” the Workforce Services Department said in a release. Manufacturing, though, has been in decline for more than a decade in the state as companies relocate operations to foreign countries where labor is cheaper.

Jobs in the trade, transportation and utilities sector declined by 2,900 from a year earlier.

Construction was flat compared with October 2010.

Government in October saw the most growth of any sector, with a 4,000 job gain from a year earlier. Federal government positions, however, fell by 800 for the year.

Educational and health-services jobs grew by 1,900 from a year earlier.

Deck said she didn’t think the report issued Tuesday was “a defining moment” for the jobs picture in Arkansas, adding that she was concerned that the number of jobs in “so many sectors [is] either flat or declining.”

Front Section, Pages 1 on 11/23/2011

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