The Federal Reserve reported Wednesday that economic conditions in the region that includes Arkansas are continuing to improve as vaccinations chip away at covid-19 and as firms are moving to increase hiring efforts.
Economic conditions across the nation improved from a prior report in February, the Fed said, noting that consumer spending is strengthening, tourism activity is picking up and manufacturing is showing robust growth.
Nevertheless, employers report that it has been difficult -- even with higher wages and bonuses -- to find workers to fill open positions.
In the St. Louis region, which includes Arkansas, "economic conditions have been moderately improved" since the February survey, according to the Fed. Those gains are attributed to a "faster-than-expected pace of vaccination and stronger-than-expected activity and an improving outlook," the report said.
Business leaders on the national and regional levels said they are optimistic that the economic recovery will continue to gain momentum after more than a year of constraints caused by the pandemic. The Beige Book report is compiled by surveying executives, economists, community organizations and market experts in 12 Fed districts.
The latest report includes information collected in March and up to April 5. Arkansas is in a district that includes parts of Illinois, Kentucky, Mississippi, Missouri, Ohio and Tennessee. Besides Little Rock and Northwest Arkansas, the region includes metro areas such as Chicago; Louisville, Ky.; Memphis; and St. Louis.
Regional employers already are planning to expand hiring efforts in the coming months. "Some large employers planned for a robust hiring season, including hosting spring job fairs," the report said. "Area universities also indicate a robust hiring season."
However, businesses are having difficulty filling job openings, with some citing supplemental unemployment benefits as contributing to hiring challenges. Unemployed workers are paid an extra $300 weekly above their state benefits by the federal government through September as part of a pandemic stimulus package approved by Congress.
"Hiring firms continued to compete for workers, who remain scarce; one employer reported the response rate among applicants offered an interview was as low as 50%," the Fed reported. "Wages have increased slightly; (business) contacts reported raising wages and bonuses to attract potential workers concerned about their health and to keep existing workers lured by new unemployment benefits."
Arkansas has reported a shrinking labor pool of available workers. The state's civilian labor force declined by 12,775 in February, the latest data available. Updated figures are scheduled for release Friday.
Despite the hiring challenges, the Fed reported that regional employment is up slightly in the transportation, manufacturing and hospitality sectors. Hospitality is "bolstered by a pickup in demand for leisure activities and travel," the report said.
In other areas, the Fed said pricing is up moderately and that there is a "high degree of sales volatility" due to supply chain challenges, federal stimulus payments to households and problems with businesses maintaining inventory levels.
For example, more consumers are buying cars, but auto dealers have slumping inventories because manufacturing has slowed as automakers wait on semiconductor chips that are in short supply. Chips are critical in new cars to power infotainment systems, brakes and power steering.
Manufacturing activity "strongly increased" through March, the report said. "Firms in both Arkansas and Missouri reported a strong uptick in new orders and production," the report added.
But there, too, manufacturers are running into hiring issues as "labor shortages continue to be a challenge as firms are unable to produce the quantity of products that can be sold," the report said.