According to the Federal Reserve, Arkansas’ economy is improving, but job openings still outstrip workers

Economic conditions in Arkansas continue to improve, although increased consumer demand is making it harder for businesses to find workers, according to a report released Wednesday.

There has been “slightly stronger consumer demand” in the state in recent months, the Federal Reserve Bank reported in its Beige Book analysis.

Arkansas has a tighter job market than the US average, Fed data show. Late last year, Arkansas labor demand exceeded labor supply by 3.3%, suggesting that for every 100 workers there are about 103 job openings. For comparison: the USA as a whole was at 2.9% at the end of the year.

“We’re hearing reports of really tight labor markets, and that was even more the case in Arkansas than in the rest of the United States [8th] District,” Nathan Jefferson, a Fed regional economist, said Wednesday of the region, which includes all of Arkansas and portions of six other states: Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.

Broader trends are emerging in Arkansas, with wages continuing to rise and consumer spending remaining solid, Jefferson said. The pressure on companies in all industries is increasing as it is difficult to find entry-level employees and fill higher-skilled positions.

“The great thing is that with all this demand for goods and services, companies are finding it really hard to get workers from all parts of the work spectrum,” Jefferson said. “That was one of the real challenges that we heard about, specifically in Arkansas.”

According to the Fed analysis, finding workers is particularly difficult in the Fayetteville-Springdale-Bentonville corridor.

“Labor shortages remain a major problem for contacts in Northwest Arkansas,” states the Beige Book. “Construction and low-wage service companies have had particular difficulties finding the labor needed to meet demand. Some contacts reported improved retention rates but difficulties finding new applicants.”

Companies have increased wages in the past two years to attract workers.

“We’ve seen wages increase slightly over the past few months,” Jefferson said. “Wage increases have slowed somewhat, although they are still rising as companies increase them to get the workers they need.”

To fill the gap, businesses in Arkansas and across the region are exploring the most effective ways to recruit workers early in their careers, with care providers targeting high school students and recent graduates in particular, Jefferson said.

“Companies are more aggressive and a little more creative when it comes to finding workers,” he said.

To this end, investment in technical education is increasing in the seven-state region, which includes major metropolitan areas such as Little Rock, the Northwest Arkansas Corridor, Louisville, Memphis and St. Louis.

“They don’t have the ability to just place an ad or post on a website, especially for positions that require training or specific skills,” Jefferson said of the company’s recruitment efforts.

Manufacturing and other sectors heavily dependent on the global supply chain are seeing faster delivery of goods, although logistics remain below pre-pandemic levels.

The Arkansas manufacturers “reported a slight decline in new orders and a slight increase in production,” the report said. “Commodity prices continue to fall and products from Asia are returning to pre-pandemic levels.”

Other highlights of the economic analysis: Housing construction begins to recover; Credit growth at banks slows; and deposits go back. However, bankers “expressed confidence in their overall position,” the Fed reported.

The Fed conducts the 8th District Beige Book analysis eight times a year.