A May survey of business contacts in the Little Rock Zone of the Federal Reserve Bank of St. Louis shows a little more than half of respondents expect economic conditions in 2015 will be better than in 2014. That’s down from three months earlier, when a little more than 80% were optimistic about the near-term outlook.
Still, Arkansas’ transportation employment in the first quarter of 2015 experienced its fastest year-over-year growth rate in over a decade. Arkansas’ personal income grew by 4.2% in the fourth quarter, nearly two percentage points faster than in the prior quarter and better than the national average.
In addition, nonfarm payroll employment in the first quarter rose 0.9% from a year ago in the Little Rock MSA the first quarter of 2015. Job growth was strongest in the natural resources, mining, and construction industries and weakest in the professional and business services industry.
The information is the latest quarterly release of the Burgundy Books, a publication produced by the St. Louis Fed. The reports offer comprehensive economic information for each of the Bank’s four zones: St. Louis, Little Rock, Ark., Louisville, Ky., and Memphis, Tenn.
The Little Rock Zone includes the majority of Arkansas, except the northeast part of the state. The population in the zone is nearly 2.5 million people, including the 710,000 who live in the Little Rock metropolitan statistical area (MSA).
Here are some other key highlights from the report:
• Transportation employment growth statewide accelerated by one percentage point to 5.8%, its fastest year-over-year growth rate in over a decade.
• The zone’s credit card delinquency rate increased in the first quarter, returning to its level in early 2014. This was the first significant increase since early 2009. The credit card delinquency rate in the Little Rock zone remained below the national rate. Auto and mortgage delinquency rates were largely unchanged in the first quarter of 2015.
• Households in the Little Rock zone continued to increase auto debt balances while leaving credit card debt balances essentially unchanged. Reports from contacts in Northwest Arkansas indicate that luxury auto dealers exceeded their sales objectives in April.
• After a strong fourth quarter in 2014, manufacturing employment growth in Arkansas slowed to below the U.S. average in the first quarter of 2015. The slowdown was particularly sharp in nondurable goods, which fell 2.2 points to 0.5%. Durable goods employment fell 1.7 points to 1.2%.
• Growth in manufacturing exports from Arkansas fell 10 points to 1.2% in the first quarter. The decline was driven by reduced exports of transportation equipment and primary and fabricated metal products. Growth in exports of computer and electronic products, which have nearly tripled over the past year, offset the decline.
• The residential real estate market in Little Rock strengthened in the first quarter of 2015. Year-to-date home sales increased 8.5% and prices increased 2.5% from one year ago. Realtors from the area noted that existing homes have been selling fast with multiple offers.
• The commercial real estate market improved. In all property types, except for office, vacancy rates fell in the first quarter of 2015. Still, the office market is strong. The industrial market performed exceptionally well; asking rents increased over 6% and vacancy rates dropped for the first time in a year.
• Despite improvements in the housing market, households continued to reduce their mortgage debt balances at a relatively modest pace.
• The USDA’s planting intentions report suggests that Arkansas farmers plan to plant fewer acres of corn, cotton, and rice in 2015, but more acres of sorghum and soybeans.
For a summary and details on other specific economic indicators, such as unemployment, home prices, building permits, credit card delinquency and banking, see the full Little Rock report here.
The next Burgundy Books will be released Sept. 22, 2015.