According to a February survey of business contacts, a little less than 50 percent expect economic conditions will worsen in 2016 compared with 2015 — a marked decline from three months earlier, when only 14 percent of contacts expected economic conditions to worsen in 2016.
This information comes from latest Little Rock Burgundy Book, a quarterly review of economic information published on March 24 by the Federal Reserve Bank of St. Louis. The Little Rock Zone includes the majority of Arkansas, except the northeast part of the state. The population in the zone is about 2.5 million, including 710,000 who live in the Little Rock metropolitan statistical area.
Measured from a year earlier, nonfarm payroll employment in the Little Rock MSA increased by 1.5 percent in the fourth quarter of 2015.
"Our firm has had difficulty filling positions because of a lack of skilled applicants locally and regionally; national applicants are commanding too high of a salary," a Little Rock area contact said in the report.
Payroll employment growth was stronger in Fayetteville (4.7 percent) and Texarkana (2.2 percent).
The zone’s unemployment rate averaged 4.7 percent in the fourth quarter of 2015, down 0.4 percentage points from the previous quarter and its lowest level since 2001.
Residential building activity was mixed across the zone in the fourth quarter, as single-family building permits rose in some areas and fell in others. Year-to-date home sales increased 8.1 percent compared with a year ago.
"Home sales activity is seasonally weak," a Little Rock zone real estate contact said in the report. "Speculative building is still very low as most local builders will not start a new home unless it is presold."
Commercial vacancy rates increased modestly in most segments.
Arkansas bankers reported that loan demand in the second quarter of 2016 is expected to be similar to a year earlier.
"Not much new business is taking place in the commercial and industrial lending marketplace," a Little Rock banker said in the report. "Most of the business is coming from stealing it from another financial institution."
Households in the zone continued to increase their total debt balances in the fourth quarter, surpassing the peak reached during the financial crisis. In the nation as a whole, debt per household is still nearly 15 percent lower than in 2008.
In the agriculture industry, Arkansas cropland values increased by 3.5 percent in 2015, its slowest growth since 2009, according to the USDA estimates.
"As row crop farmers make plans for the 2016 crop year, they are currently facing the worst grain prices and economic outlook in the past 6 to 7 years," an Arkansas contact said in the report.