story by Wesley Brown, courtesy of Talk Business & Politics
wesbrocomm@gmail.com
A new Arvest survey indicates Arkansans are growing more confident about the financial situation, and a closely watched Creighton report suggests that economic growth in and around Arkansas is slowing.
Many Arkansans are looking forward to purchasing a “big ticket” household item during the second half of 2015 as many have seen their personal financial situation improve this year, according to the spring edition of the 2015 Arvest Consumer Sentiment Survey released Tuesday (June 2).
“More Arkansas consumers are expecting to maintain or improve their personal financial situations within the year,” said Kathy Deck, Director of the Center for Business and Economic Research in the Sam M. Walton College of Business at the University of Arkansas. “This uptick in outlook is consistent with growth in the labor force and declines in unemployment throughout the state. Arkansans are a bit more cautious about making optimistic predictions for the overall economy, but are still more positive than in previous surveys.”
This is the second phase of Arvest’s series of consumer sentiment surveys that offer a reading of how Arkansans and consumers in neighboring states are feeling about their current financial situation. Earlier this month, the first phase of the Arvest survey showed that consumer confidence in Arkansas had jumped more than ten points since October, mainly because of the state’s improving employment and income situation, and lower gas prices.
In the most recent survey conducted in March, 30% of Arkansas consumers expect their personal financial situation to improve over the next 12 months, up 4% from the previous survey in October. Fifty-five percent, meanwhile, expect it to remain the same over the next 12 months. That’s up from 54% in October.
REGIONAL COMPARISON
The other states surveyed were Oklahoma and Missouri, along with the Kansas City metropolitan area. Across the region, 53% expect their personal financial situation to stay the same, while 33% expect it to improve.
When it came to determining buying conditions, 56% of Arkansans believe the next six months will be a good time to buy items like furniture, televisions and refrigerators. That’s eight points better than 48% who were looking to make a major household buying decision in October.
By comparison, 59% of the entire region believes the next six months will be a good time to buy, up 18% since the last survey in the fall.
On the overall economy, Arkansans felt slightly better in March than they did in October about current business conditions. While 29% expected good times for businesses over the next year, 39% expected the same over the next five years. That compares to 23% and 32%, respectively, in October.
Expectations for the region as a whole were also much higher. Thirty-four percent of consumers across the region expect good times for businesses over the next year, while 42% expect robust economic growth over the next five years. Those percentages are up a whopping 36% and 16.7%, respectively, compared to October.
The Arvest Consumer Sentiment Survey, modeled after the national consumer sentiment survey released monthly by Thomson Reuters and the University of Michigan, is conducted by the Center for Business and Economic Research (CBER) in the Sam M. Walton College of Business at the University of Arkansas. The University of Oklahoma’s Public Opinion Learning Laboratory conducted the 1,200 random phone surveys.
CREIGHTON REPORT
The Creighton University Mid-America Business Conditions Index for May shows that the regional economy that includes Arkansas is pointing to positive but slow economic growth over the next three to six months.
Ernie Goss, director of Creighton University’s Economic Forecasting Group, warned that the region’s job market could experience difficult conditions in the third quarter.
“Firms linked to energy and agriculture are experiencing pullbacks in economic activity. Job growth in Oklahoma and North Dakota, two energy-producing states, have moved into negative territory,” Goss said. “Other states dependent on agriculture are also experiencing slower economic growth. That growth is likely to move even lower in the months ahead as the strong U.S. dollar slows economic activity even more.”
The monthly index developed by Creighton University is a leading economic indicator for a nine-state region stretching from North Dakota to Arkansas. In April, the index slumped to 50.4 from April’s tepid 52.7 on a scale of zero to 100.
Overall, the leading economic indicator for Arkansas in May slipped to 49.8 from 53.6 in April. Components of the index from the monthly survey of supply managers were new orders at 50.3, production or sales at 52.1, delivery lead time at 51.1, inventories at 47.6, and employment at 47.6.
“Business activity slowed for both durable and nondurable goods manufacturers in the state,” Goss said.
The Creighton University index is a mathematical average of indices for new orders, production or sales, employment, inventories and delivery lead time. This is the same methodology used by the National Institute for Supply Management, formerly the Purchasing Management Association, since 1931.
Unlike Arvest’s consumer-focused survey, the Creighton University poll quizzes supply managers in Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota to get their reading on business conditions.
One of the more surprising notes from the Creighton University survey was that employment remained in a range indicating slightly negative to stagnant job growth for manufacturing and value-added services firms in the region.
“These negative job numbers will spill over into the broader job market in the months ahead,” Goss said of the job gauge that fell to 48.3 from 49.2 in April.
This month, Goss said, supply managers were asked about the hiring situation at their firms.
“Ten percent of supply managers reported an upturn in the number of applicants for each available job. On the other hand, approximately 9% of supply managers indicated the shortage of qualified workers increased from last month. The remaining 81% indicated no change in the number of applicants to open positions,” Goss said.