According to a May survey of business contacts, 69 percent expect economic conditions in 2016 will be about the same as last year, an improvement from three months earlier, when a little less than half expected conditions to worsen.
This information comes from the latest Little Rock Burgundy Book, a quarterly review of economic information published on June 21 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.
Labor market conditions remained vibrant in most areas, with a low unemployment rate of 4.1 percent for the zone in the first quarter and anecdotal evidence suggesting mounting upward pressure on nominal wage growth.
A Little Rock area contact said in the report, “Salaries have increased in parallel with cost of living. However, drivers and technical employees are often paid more due to challenges with recruitment and retention of these skilled employees.”
The Fayetteville MSA’s unemployment rate was 2.9 percent in the first quarter, its lowest rate in 15 years.
“Employment increases were driven by growth in retail, professional services and health and education sectors,” a northwest Arkansas area contact said in the report.
Measured from a year earlier, payroll employment growth in the Fayetteville and Texarkana MSAs was stronger than the nation’s growth.
Housing activity was also mostly good throughout the zone in the first quarter.
“Multi-family developers continue to look for new sites to build apartment complexes in the Little Rock area,” a Little Rock real estate contact said in the report.
Single-family building permits increased in four of the six MSAs, while house prices were up in five of the six MSAs.
But, “speculative homebuilding is still very low,”another Little Rock real estate contact said in the report.
In the Little Rock MSA, office rents rose, at their fastest rate in five years. “The office market continues to tighten,” said a third Little Rock real estate contact.
Growth of household credit card balances accelerated modestly in the first quarter compared with the previous quarter, while credit card and automotive loan delinquency rates were higher.
A Conway area auto dealer said in the report, “Good weather, lower interest rates, longer terms and lower fuel prices have positively impacted my business.”
Arkansas bankers reported that loan demand in the third quarter of 2016 is expected to be the same as it was in 2015.
But the return on average assets at the state’s commercial banks rose to its highest level since 1998.
In the agriculture industry, Arkansas farmers nearly doubled their planted corn and cotton acreage this year compared to last year, while significantly reducing their planted acreage of soybeans and sorghum.