Economic conditions in Arkansas continue to improve, though increased consumer demand is making it more difficult for companies to find workers, according to a report released Wednesday.
There has been “slightly stronger consumer demand” in the state over the past few months, the Federal Reserve Bank reported in its Beige Book analysis.
Arkansas has a tighter labor market than the United States average, the Fed data shows. At the end of last year, Arkansas’ labor demand exceeded labor supply by 3.3%, an indication that there are roughly 103 job openings for every 100 workers in the labor force. By comparison, the U.S. overall was at 2.9% at year’s end.
“We’re hearing reports of really tight labor markets and that was the case even more so in Arkansas than the rest of the [8th] District,” Nathan Jefferson, a regional economist with the Fed, said Wednesday of the region that includes all of Arkansas and portions of six other states: Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.
Broader trends in Arkansas are emerging, with wages continuing to rise and consumer spending remaining solid, Jefferson said. Pressure is increasing on companies across sectors with challenges in finding entry-level workers as well as filling higher-skilled positions.
“The big thing is that with all this demand for goods and services, companies are having a really difficult time getting workers across all parts of the labor spectrum,” Jefferson said. “That was one of the real challenges that we heard about in Arkansas specifically.”
Finding workers is especially difficult in the Fayetteville-Springdale-Bentonville corridor, the Fed analysis noted.
“Labor shortages continue to be a significant issue for Northwest Arkansas contacts,” the Beige Book said. “Construction and low-wage services firms saw particular difficulties finding workers needed to meet demand. Some contacts reported improved retention rates but difficulties finding new applicants.”
Businesses have increased wages over the past two years to attract workers.
“We did see wages rise slightly over the last few months,” Jefferson said. “Wage increases slowed a little bit though they are still rising as companies increase them to get the workers they need.”
To compensate for the shortages, companies in Arkansas and across the region are exploring the most effective methods to recruit workers early in their career development, with nursing providers in particular reaching out to high school students and recent graduates, Jefferson said.
“Companies are being more aggressive and a little more creative in getting workers,” he said.
To that end, investments in technical training are increasing across the seven-state region that includes major metro areas such as Little Rock, the Northwest Arkansas corridor, Louisville, Memphis and St. Louis.
“They’re not able to just put an ad out or on a website, particularly for positions that require some training or specific skills,” Jefferson said of business-recruitment efforts.
Manufacturing and other sectors that rely heavily on the global supply chain are seeing more rapid delivery of goods, though logistics remain below pre-pandemic levels.
Arkansas manufacturers “have reported a slight decrease in new orders and a small rise in production,” the report said. “Raw material prices continue to decrease, with products from Asia returning to pre-pandemic levels.”
Other highlights from the economic analysis: Housing is beginning to rebound; loan growth at banks is slowing; and deposits are dropping. Bankers, however, “expressed confidence in their overall position,” the Fed reported.
The Fed conducts the Beige Book analysis for the 8th District eight times a year.