Economic conditions in Arkansas and surrounding states may be starting to stabilize entering 2023.
In Arkansas, however, labor shortages — especially in the health care and retail sectors — remain a top concern across most industries.
That’s the verdict from the Federal Reserve Bank’s Beige Book economic report issued this month.
Employers are stepping up to attract and retain workers, with one Arkansas business offering loans to help employees with rent or housing costs. Employees are getting higher wages across industry sectors.
“Wages have grown slightly since our previous report,” the report says. “Staffing shortages persist, and companies are continuing to raise wages to attract and retain new workers.”
An unnamed Arkansas brewery offered loans to employees to help with housing costs and considered buying property to rent apartments to employees.
The Beige Book report provides an overview of economic conditions in the St. Louis District based on information received from unnamed business contacts. The district includes Arkansas and six other states: parts of Illinois, Indiana, Kentucky, Missouri, Mississippi and Tennessee.
Overall, economic conditions in the region have not shown any change since the most recent report in November.
Highlights from various sectors note:
• Commercial bankers are reporting that lending to small businesses has slowed in recent months and the fall-off is leading to potential issues with cash flow and capital spending.
• Supply-chain bottlenecks, which have been a pandemic-fueled problem for the past two years, are improving but “businesses continued to struggle to secure key (parts),” the Fed reports.” Some firms sought to buy in bulk whenever possible, with the belief that they could offload unwanted inventory in the future.”
• Manufacturers are seeing the benefits of an unsnarled supply chain: they’re receiving parts and equipment quicker and lead times on orders have improved. “Supply chain congestion has also started to improve for some companies, which is beginning to lower the price growth of manufacturing (parts) and return inventories to normal levels,” the report said.
• Holiday spending did not quite give businesses the boost they wished for. Retailers, auto dealers and hospitality contacts reported lower business activity and a mixed outlook, with many retailers noting Black Friday spending was spread over a longer period of time. Better days for the industry may not be here soon: Hospitality businesses have lower expectations for the coming months, citing an expected increase in sicknesses, higher-than-average inflation and staff shortages.
• Agriculture is performing well, reporting strong sales and few trade disruptions amid global uncertainty.
• Auto dealers in Little Rock noted that inventories remain too low to meet demand at current prices, especially in used cars, and that they had a surprising surge in foot traffic shortly after Thanksgiving.
• Homebuying has slowed even beyond normal seasonal trends, and banks reported that loan demand slowed moderately. Builders say labor costs are forcing them to raise prices.
Labor shortages remain an issue across the region and across industries, and “many companies still reported being understaffed,” the Beige Book reported. “Organized labor and staffing contacts reported high demand for workers who could fill positions immediately.”
Building a robust labor pool “remains our biggest challenge in Arkansas,” Commerce Secretary Hugh McDonald said last week with the release of December unemployment figures. There have been improvements but there remains a shortfall of workers to fill what McDonald estimates are 80,000 open positions in the state.
As the year closed, there were more Arkansans with jobs than in 2021 and the state’s labor force participation rate was up three-tenths of a percentage point from November to December. The labor force was up 21,372 from December 2021.
The Arkansas District Export Council and Arkansas Manufacturing Solutions are partnering to produce six webinars beginning Wednesday to teach export businesses in the state how to expand their operations.
Sessions will highlight basic information to start an export operation and include details on how to increase revenues and profits substantially as well as boost productivity, spread risk base and spark new product ideas.
Webinars will be held weekly through March 8 and all sessions will be conducted online beginning each day at 2:30 p.m.
Sessions also will include a focus on developing customer relationships, building a global infrastructure, international logistics, finance and regulatory and legal issues.
More information is available at exportarkansas.org.
BUILD A TALENT PIPELINE
Be Pro Be Proud has scheduled four tours across Arkansas beginning in March to connect employers with students who have been matched for specific industries.
Be Pro is a mobile job-training workshop that offers hands-on experience to promote careers in skilled trades.
Employers can register through Feb. 15 and participating companies will have the opportunity to interact with students to create a talent pipeline.
The vehicle will visit Rogers High School from March 6-10; the Peak Innovation Center in Fort Smith from March 13-17; the Grand Prairie Center in Stuttgart from March 28-30; and Nettleton High School in Jonesboro from April 10-14.
High school seniors and two-year college students will be matched to employers interested in hiring individuals for open technical positions.
The effort is geared to help students identify opportunities that don’t require a college degree but offer long-term careers with well-paying jobs in industries that include the construction, manufacturing, transportation and utility sectors.
“Though we are experiencing a national shortage of skilled trades professionals in our workforce, through our program we have commitments from nearly 5,000 qualified students interested in pursuing technical professions,” said Andrew Parker, the executive director of Be Pro Be Proud. “Now is the time for our employers to help support the next generation of talented trade workers.”
The tour is sponsored by the Society for Human Resource Management. Registration and more details are available at beprobeproudar.org.
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