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Burgundy Book: Manufacturing Struggles, Retail Construction Strong

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According to a November survey of business contacts, 48 percent expect that economic conditions in 2016 will be somewhat better than in 2015, while only 14 percent of contacts expect economic conditions will be somewhat worse.

That's according to the fourth-quarter Burgundy Book (PDF), published Dec. 18 by the St. Louis Federal Reserve. The Little Rock Zone includes most of Arkansas except for the northeast part of the state. The zone covers about 2.5 million people, including the 710,000 who live in the Little Rock metropolitan statistical area.

Measured from a year earlier, nonfarm payroll employment in the Little Rock MSA rose 2.3 percent in the third quarter of 2015. That was the strongest growth since the third quarter of 2006, the report said.

The zone’s unemployment rate averaged 5.1 percent in the third quarter, its lowest level since the third quarter of 2008.

Single-family building permits increased in four of the zone's six MSAs. Home prices were up from a year earlier in all six MSAs, paced by increases in the Hot Springs and Texarkana MSAs that exceeded the national average.

The report also show commercial real estate activity as mixed in Little Rock.

"One noticeable change is with retail demand and availability," a Little Rock area real estate contact said in the report. "More build-to-suit projects due to growth in consumer spending."

Per capita total debt balances rose in the Little Rock Zone in the third quarter, as mortgage debt rose from year-earlier levels for the first time since 2012.

In the third quarter, return on average assets at Arkansas banks remained appreciably higher than at U.S. peer banks. Arkansas bankers reported that loan demand in the fourth quarter was unchanged from a year earlier.

According to preliminary estimates, Arkansas farmers harvested less corn, cotton and rice in 2015 compared with a year earlier. This is in part attributed to rain during planting season. But the poultry industry is seeing growth.  

"We are kind of an anomaly in the chicken industry," an Arkansas chicken farmer said in the report. "We are starting 14 new houses per month at my company.”

Manufacturing activity has slipped in Arkansas and manufacturing employment in the state is now nearly 20 percent below its pre-recession level. According to the report, manufacturing export decreases were driven by declines in exports of transportation equipment, fabricated metal products, primary metals and food products. 

"I’m concerned about low oil prices and their effect on manufacturing," a Little Rock area transportation executive said in the report. 


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