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Making a move in May.

Consumer Sentiment Improved As 6,400 Additional Arkansans Went To Work

May unemployment figures for Arkansas reflected what economic investigators at the University of Arkansas at Little Rock already knew.

The recovery is taking hold.

The state's unemployment rate fell 0.4 percent to 7 percent in May.

Meanwhile, the employment level hit a new high for the third consecutive month.

Figures released by the U.S. Bureau of Labor Statistics showed an increase of 6,400 jobs in May statewide for total of 1,088,700. That's an increase of 40,100 jobs from the same month a year ago.

However, the U.S. unemployment rate reached 7.5 percent in May, a 0.3 percent increase from April and 0.7 percent increase from May 1991.

UALR's Arkansas Institute for Economic Advancement and Arkansas Institute of Government released a quarterly consumer sentiment survey that mirrored the improving Arkansas employment picture. The survey was performed by telephone during two weeks in May.

The survey, the third of its kind, indicated that Arkansans had more positive attitudes about their personal economic situations and the state's economy as a whole.

Survey participants were questioned about taxes, employment, spending and insurance.

Of the 437 adult Arkansas surveyed, 18.1 percent rated Arkansas' current business climate as good, 58.2 rated conditions as average and 23.7 percent rated conditions as bad.

That shows continuing improvement. The "good" rating increased from 11.1 percent in November and 13 percent in February.

"Survey respondents are increasingly positive about business conditions in Arkansas," the UALR researchers wrote. "Although negative response distribution to the question continues to outweigh the positive category, there is a clear trend toward the positive side."

When asked whether they thought they and their families would be better or worse off financially at this time next year, 36.7 percent of the respondents expected to be better off, 50.2 percent expected to be the same and 13.1 predicted they would be worse off.

In February, 21.2 percent expected to be worse off in a year, and 31 percent expected to be in better condition financially.

"The negative feeling on all the indexes is going down," says Ronald Hy, one of the UALR investigators. "People are feeling more positive about the state and the economy."

Shifting Signs

A shift was seen in the index of job expectations, a key indicator, according to Hy. A sharp decrease in Arkansans' negative perceptions about the job market occurred with 20.6 percent of those surveyed responding negatively, down from 38.6 percent in February.

A positive response of 30.4 percent, up from 22.8 percent in February, was recorded. Another 48.9 percent of respondents remained neutral on the state of employment in Arkansas.

Those figures are encouraging considering the national unemployment level, which hit an eight-year high in May due to an influx of graduating college students and young job seekers.

Hy says Arkansans "feel better about spending on most items" than they did several months ago. Automobile sales was the only area in which Arkansas consumers remained overly cautious. About 39 percent of respondents said it was a good time to purchase a new vehicle, down from 44.6 percent in the previous survey.

Consumers' attitudes toward buying new homes were remarkably upbeat, falling in line with the national trend in housing starts. National figures released earlier this month showed construction of single-family homes and apartments rising 11 percent in May to a seasonally adjusted annual rate of 1.23 million. That was the largest increase since February 1991.

"More than 60 percent of the respondents think now is a good time to buy a home, up from about 50 percent in November," the UALR report says. "Similarly, almost 75 percent think buying a home is a good investment in today's market, up from 71.5 percent in November. About 80 percent of respondents in the $25,000-$40,000 and over $40,000 |annual income~ categories think buying a home is a good investment."

State Revenues

The increase in state general revenues that began in February continued in May, according to records compiled by the Bureau of Legislative Research's Office of Tax Research. General revenues reached $244.5 million in May, up from $204.3 million in April.

Current revenues exceed the most recent state forecast by more than $22 million for the fiscal year and $4 million for the month of May.

That increased spending on the part of Arkansans was reflected in the quarter's index of consumer sentiment. The percentage of negative respondents fell from 25.1 percent in February to 23.7 percent in May. The percentage of positive respondents rose from 24.3 percent to 25 percent. The neutral category remained constant, accounting for about half of the index measure for a third consecutive quarter.

As consumer sentiment improves, Hy expects the state's economy to improve along with it. He is predicting an even better showing in the next quarter.

"I think there will be constant improvement," Hy says.

Arkansas' upward economic trend is evident in the number of non-agricultural wage and salary jobs, which increased by 5,800 jobs during May for a total of 965,900.

The majority of the new jobs (1,700) came in the construction field. Another 1,500 jobs were added in the trade sector, and 1,500 jobs were added in the services area.

The only drop came in the government sector, which saw a decline of 600 jobs in May as the state budget crisis intensified.

Even minority and youth unemployment rates fell in May.

The minority rate declined from 13.2 percent in April to 12.6 percent in May, with the white rate dropping from 6.4 percent to 6.1 percent.

The youth unemployment rate, which includes workers ages 16 to 19, fell from 16.6 percent to 15.8 percent. Arkansas' minority youth unemployment rate decreased from 28.5 percent to 27.4 percent, and the white youth unemployment rate decreased from 14.5 percent to 13.8 percent.

A Move In MSAs

May's favorable employment news carried over to the state's four metropolitan statistical areas. All experienced lower unemployment rates.

The Fayetteville-Springdale MSA had a 3.5 percent unemployment rate, the state's lowest. Four hundred jobs were created in the MSA.

The Little Rock-North Little Rock MSA, which has 278,825 people in its civilian labor force, added 1,550 jobs in May. The unemployment rate fell from 6.3 percent to 6.0 percent. The Little Rock-North Little Rock MSA includes in Pulaski, Faulkner, Lonoke and Saline counties.

The Fort Smith MSA, which includes Crawford and Sebastian counties in Arkansas and Sequoyah County in Oklahoma, gained 650 jobs. The unemployment rate declined from 7.5 percent to 7.2 percent.

The unemployment rate in the Pine Bluff MSA fell from 10.9 percent to 10.4 percent. Almost 200 jobs were added to a civilian labor force of 38,875.
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Title Annotation:Arkansas Economic Analysis
Author:Taylors, Tim
Publication:Arkansas Business
Date:Jun 22, 1992
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