Pandemic pauses recent gains in Arkansas’ manufacturing sector employment

After more than a decade of struggling to gain employment momentum, Arkansas’ manufacturing sector began showing signs of renewed life in early 2018. And then the calendar turned to March 2020, and COVID-19 turned disruptive and deadly.

Once the state’s largest job sector with some of the best paying blue-collar jobs, the manufacturing sector began a steady decline in the late 1990s after posting peak employment of 247,600 in July 1995. In October 2009, the sector first fell below 160,000 jobs, but in February 2018 returned to above 160,000 jobs and consistently remained above 160,000 until March 2020 when early economic shutdowns in the U.S. and Arkansas resulted in employment falling to 158,800. The sector would hit a low of 143,300 in July. The manufacturing sector rose to 147,400 jobs in November, up from 145,500 in October and down from the 162,100 jobs in November 2019. As of November, the most recent data available when this article was written, Arkansas’ manufacturing sector was down 40.4% jobs since the peak of July 1995.

Manufacturing employment is down in Arkansas’ three largest metro areas.
• Central Arkansas (Little Rock-North Little Rock-Conway)
November 2020: 19,000
November 2019: 20,600

• Northwest Arkansas
November 2020: 28,800
November 2019: 30,500

• Fort Smith metro
November 2020: 16,500
November 2019: 17,600

The pandemic put an end to four years of consecutive gains in average monthly manufacturing employment in the Northwest Arkansas metro and two years of gains in central Arkansas. The Fort Smith metro has had a steady annual decline in average monthly employment since peaking at 30,600 in 1999.

U.S. manufacturing jobs totaled 12.253 million in November, down from 12.868 million in November 2019, but up from the low of 11.489 million in April 2020. Nationwide manufacturing employment peaked at 19.553 million in June 1979.

There are some signs of renewed life in the sector. According to a Dec. 15 report from the U.S. Federal Reserve, national industrial production rose 0.4% in November. Production fell a troubling 16.5% between February and April but has returned to about 5% below the pre-pandemic level, noted the Federal Reserve report.

“In November, manufacturing output advanced 0.8 percent for its seventh consecutive monthly gain. An increase of 5.3 percent for motor vehicles and parts contributed significantly to the gain in factory production; excluding motor vehicles and parts, manufacturing output moved up 0.4 percent,” the report noted.

Michael Pakko, chief economist and state economic forecaster at the Arkansas Economic Development Institute at the University of Arkansas at Little Rock, said manufacturing is one of the few sectors recovering more slowly in Arkansas than the rest of the nation. Between February and April, total manufacturing employment declined 10.6% across the U.S. and 10% in Arkansas. By October, the net change since February narrowed to -4.9% for the U.S. but remained negative 9% in Arkansas.

Pakko sees some hope for the state’s manufacturing sector based on “pent-up consumer demand” and the need to rebuild supply chains. He said the state’s manufacturing sector could “accelerate to meet the pace of nationwide recovery in coming months.”

Read the full article on the Talk Business & Politics website here.