July 2, 2022
  • July 2, 2022

Unemployment in May stable at 3.2%

By on June 18, 2022 0

Arkansas officials reported Friday that May’s unemployment rate remained unchanged at 3.2%, following a national trend of strength from April. At 3.6%, the overall unemployment rate in the United States also remained stable between April and May.

The state’s workforce continued to grow in May, adding 2,545 Arkansans seeking employment. The Arkansas Division of Workforce Services reported Friday that there were 2,367 more Arkansans employed last month and 178 more unemployed.

Continued improvements in the workforce are a positive signal, Commerce Secretary Mike Preston said. “There’s been modest growth and it’s going in the right direction,” he said. “Given the unstable nature of the economy at the moment, it’s good to have some stability in the labor pool. It’s good because going forward, with a recession looming , we don’t know how long these numbers will continue to be positive.”

Arkansas saw job gains in six industry sectors, with non-farm payroll employment setting a record number of employees at 1.31 million, up 1,300 jobs in May. Recreation and hospitality increased by 1,500 jobs, highs in the state. Financial services and professional and business services each created 1,100 jobs.

The retail sector lost 1,600 jobs while health care and social assistance also fell by 1,600.

“There’s not a lot of action going on the unemployment side,” Michael Pakko, chief state economist at the Arkansas Institute of Economic Development, said Friday. “We’re kind of stuck at very low levels and we’re seeing a slow increase in labor force attachment on this side of the ledger.”

Heading into the second half of the year, rising interest rates are the main concern for unemployment, which has hovered below 3.5% since September. The Federal Reserve raised interest rates by 0.75% this week and forecasters expect a similar increase again in July. Higher interest rates are a tool to keep inflation in check by slowing consumer demand, which in turn could dampen output and reduce jobs.

“It will be interesting to see how it plays out in the state because not only do we have low unemployment but we have a high number of open jobs,” Preston said, estimating there are around 50 000 open positions in Arkansas. “That number could go down if companies slow down their hiring.”

Similarly, Pakko said interest rate increases that continue into next year “are likely to slow economic expansion nationwide and Arkansas is no exception.”

National forecasts predict that the unemployment rate in the United States will exceed 4% as a result of interest rate hikes. “I wouldn’t be surprised to see the same thing happen in Arkansas,” Pakko said. “That should be on the horizon later this year and next year.”

The Fed said its goal in raising interest rates was to reduce inflation, which has hit a 40-year high above 8%, from the 2% rate that was common before the pandemic.

Year-over-year, there were 34,671 more Arkansans employed last month than in May 2021. The trade, transport and utilities sector posted the largest gain, adding 12,500 jobs ; manufacturing gained 7,500 jobs over the year; and leisure and hospitality added 7,200 workers.

Among the major economic sectors, only education and health services posted a year-over-year loss, down 400 jobs.