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NORTH LITTLE ROCK — Arkansas' unemployment rate held steady at 7.1 percent in September, though losses in some job sectors indicate an economic recovery is not yet at hand.
The numbers released Wednesday by the Arkansas Workforce Services Department show the state is doing better than the nation as a whole. The national September unemployment rate rose on 0.1 percentage point to 9.8 percent.
Having so many people unemployed has affected tax revenues. On Tuesday, Gov. Mike Beebe announced a $100 million cut to the state budget, a 2.2 percent reduction in spending.
That cut is modest compared to the billions some states have slashed from their budgets. Yet Arkansas still has 32,200 fewer non-farm payroll jobs than a year ago.
John Shelnutt, an economist with the Arkansas Department of Finance and Administration, noted Wednesday that 4,100 construction jobs were lost in September, compared to 300 construction jobs added in August.
"We were doing better than most other (states in construction jobs)," Shelnutt said. "Based on the September numbers, we moved down quite a bit. It's worth watching."
The administrative and support category, which includes temporary workers, was down by 1,700 jobs, a stark change from August's increase of 2,800.
"That's not a good sign. That should be an area that leads the recovery in the labor market," Shelnutt said.
The 20,200 manufacturing jobs the state has lost in the past year mark a change in that sector, he said. Some of those jobs will be replaced by new employers, such as several wind energy firms that have chosen Arkansas as a U.S. base.
But some jobs won't return. The Whirlpool Corp. factory in Fort Smith went from more than 4,000 workers to about 900 and moved some production lines to Mexico. That rippled through the area's economy, reducing income for suppliers and other businesses that relied on the plant.
Aircraft finishing plants in Little Rock have had layoffs and automotive parts plants also have less work as demand for cars has dropped. Even Denmark-based LM Glasfiber, the windmill blade manufacturer with two plants in Little Rock, laid off more than 200 people after demand plunged with the credit market crisis.
The aircraft, automotive and windmill factories can call back workers when orders rebound, but that may take a while.
Shelnutt said the state revenue forecast was developed with the assumption that the unemployment rate won't improve and may run higher in fiscal year 2010, which began July 1.
"Now we're in the weakest part of the year," he said. Job numbers are expected to improve a little in the second half of the fiscal year, starting in January.
Even though a recovery isn't yet under way, Arkansas continues to have less of a tough time than most states. Thirty-seven have higher unemployment rates than Arkansas.
"I think we can stay at a fairly low unemployment rate compared to other states and the nation," Shelnutt said.
The September jobless report ended a seven-month string in which the loss of jobs was greater than new jobs. There was a net gain of 6,500 jobs from August to September.
