Manufacturing continues to buzz in Arkansas as other sectors struggle to weather price hikes, hiring issues and supply chain disruptions, according to a report released Wednesday by the Federal Reserve Bank.
Still, a regional economist at the Fed’s office in St. Louis predicts job growth will remain strong in central Arkansas and other key areas of the state through this year.
“We’ll likely see a fairly fast track continue at the pace of 2021 through the year,” economist Nathan Jefferson said Wednesday, noting that economic growth will likely slow through 2023. “2021 has been a recovery from employment relatively stronger, but is likely to cross this coming year.”
Arkansas saw strong job growth in the final months of 2021, and statewide unemployment fell to 3.4%, reaching an all-time high through May 2019. The state also reached a record number of unemployed in November, when 46,351 Arkansans were out of work. The previous month there were more than 50,500 unemployed Arkansans.
On Wednesday, the Fed released its latest Beige Book report which outlines economic conditions across the country. The Fed said the overall economy in Arkansas and the region remained stable and unchanged from the last Beige Book released in December.
Arkansas is part of the Fed’s 8th District, which also includes parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.
“We have seen, throughout the district, a moderate and continued improvement in economic conditions,” Jefferson said. “The two main issues that remain, and that we’ve seen for some time now, are that we have employers who continue to struggle to hire and some supply chain issues.”
Even with that, manufacturing continues to improve in the state. “Manufacturing activity has continued to expand at a healthy pace since the previous report, although the growth rate has leveled off,” the Beige Book said. “Businesses in Arkansas and Missouri reported strong increases in new orders and production.”
At the same time, however, manufacturers are being held back as inventory levels dwindle and critical parts and equipment are difficult to replace due to supply chain challenges.
When it comes to the pandemic, the omicron variant of covid-19 appears to produce only “short-term uncertainty” and business owners don’t seem overly concerned that it will have a lasting economic effect, Jefferson said.
There are pockets of the economy where the hiring shortage is crippling. For example, Jefferson said a school district in Arkansas had an extreme shortage of school bus drivers that it was working to overcome. “They pull just about every commercially licensed driver they can find,” he added.
Similarly, the competition for skilled labor in the construction industry “has become very, very competitive,” and one official noted that other builders were coming to his site to recruit tradespeople.
Real estate in the Little Rock metro area, like elsewhere in the district, has seen housing inventories tighten as sales rise and fewer homes are built due to rising material prices and delays. delivery related to the slowdown in the supply chain.
Still, the Beige Book also noted that there is “continued strong demand” for commercial real estate, particularly industrial properties to support distribution, warehousing and manufacturing operations in Arkansas.