Economic activity in Arkansas’ region has increased slightly according to a new report from the Federal Reserve, but conditions have begun declining.
In the latest Beige Book report, the Federal Reserve reports that most of its 12 districts saw “modest or moderate” economic expansion since the previous report was released in late October. Most of the districts saw unemployment slowly rises but local businesses reported difficulty in hiring and retaining workers. In addition, labor problems have reportedly risen due to increasing COVID-19 infections.
The St. Louis District, which Arkansas is part of, has seen “highly variable” activity across industry sectors, according to the report. As a result, the business outlook, while improved from the lows of the pandemic, has remained pessimistic.
Arkansas’ district had its strongest employment growth in the manufacturing, transportation and health care sectors. Smaller firms and those in the leisure and hospitality sectors had more mixed success with employment, Federal Reserve partners reported.
In October, Arkansas had a total nonfarm employment of 1,243,900, an increase from September’s employment number of 1,232,400. Matching up with the Federal Reserve report, the manufacturing industry had a 1,000 employment jump from month-to-month, while the transportation/trade sector saw an increase of 3,800 employees.
The Beige Book report noted that manufacturing activity has “moderately increased” in Arkansas, while strongly increasing in the neighboring state of Missouri. For both Arkansas and Missouri, manufacturing firms saw a “strong uptick in new orders and production” during the period the Beige Book report covers.
Residential real estate also showed modest growth during the reporting period with significant home sales and low inventory levels. Commercial real estate showed more mixed results with lower demand for retail and office space and a significant decline in speculative activity in for office/retail development. Despite this, industrial development was buoyed by “strong market demand, with multiple active projects across the region.”
Both the finance industry and agriculture industry showed little change since the previous report. For agriculture, the Federal Reserve revised its production forecasts for corn, cotton and soybeans downward while increasing forecasts for cotton production. The Fed noted that corn, rice and soybean production levels are projected to be “significantly higher than 2019.”
Wages have shown modest growth. Low-wage and high-contract positions have driven this trend, with two-thirds of the Federal Reserve contacts in the St. Louis district reporting that wages were raised in response to labor shortages for these positions.
