Ark. unemployment jumps half a percentage point

LITTLE ROCK Arkansas' unemployment rate jumped by half a percentage point in October, an increase unseen in more than a quarter century as the national economic slowdown finally reached the state.

Data released Friday by the state Department of Workforce Services shows the unemployment rate rose to 5.4 percent from 4.9 percent in September. April and May of 1980 was the last time the state saw a percentage increase that size, as the nation became beset by the worst recession since the Great Depression in terms of unemployment. Then, the national jobless rate rose as high as 10.8 in late 1982 before inching down.

Data shows the state's unemployment rate has never jumped more than half a percent in a month.

However, much of Arkansas' job losses came from the leisure and hospitality industry, which often wilts away as summer tourist season chills into fall. The state data showed the industry lost 2,300 jobs, as construction lost 1,300 in a seasonal slowdown amplified by woes in the housing market.

Manufacturers reported losing 1,300 jobs.

The state's overall unemployment rate for October remained lower than a year ago, when it sat at 5.7 percent. Still, the numbers may show a state shielded from much of market problems by exploration in the Fayetteville shale play and other development could be at risk.

"It's not that there should be a sense that we're bulletproof or anything of the sort," said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas. "Certainly, we do see weakening growth."

Deck cautioned not to read too much into the unemployment rate jump, as she felt last month's rate was "abnormally low." However, she said the state's economy would continue to soften.

Kimberly Friedman, a spokeswoman for the Department of Workforce Services, stressed that the state's unemployment rate remains lower than the national average. However, she acknowledged Arkansas may start to catch up.

"I think it's fair to say this is the first month that we've seen our rate reflect the impact that occurred on the national level," she said. "Arkansas, just historically, tends to see an impact later than maybe other states do."

Already in November, several manufacturing plants in Fort Smith alone have shed more than 1,000 jobs. Ranger Boats laid off 130 workers at its plant in northern Arkansas.

While the government sector added 2,700 jobs in October as schools resumed classes around the state, Gov. Mike Beebe has proposed a $4.4 billion two-year budget that leaves out nearly $146 million in funding for Medicaid programs, prisons and other state services. The governor previously cut $107 million from state agencies' budgets for the current fiscal year, including $32 million lopped away from the state's two- and four-year colleges and universities.

Matt DeCample, a spokesman for Beebe, said the governor's budget proposal took into account forecasts warning of a slowdown. However, Beebe's budget also calls for a 1-cent reduction in the state's sales tax on groceries a major campaign promise for the governor, who is up for re-election in two years.

This is "what we figured we might see as part of some fallout from the national problems we've been seeing," DeCample said.