Job Growth in Little Rock Metro Surpasses Pre-Pandemic Peak

An aerial view of downtown Little Rock looking northeast across the Arkansas River (Amanda Cordell)

The Little Rock metropolitan area’s economy has stabilized in the aftermath of the COVID-19 pandemic and job growth has surpassed pre-pandemic levels with room to spare, according to a new report from Metroplan.

In October, the area had nearly 389,000 jobs, compared to the previous high of about 366,000 in February 2020, the region’s long-range planning agency said in its biannual Metrotrends Economic Review and Outlook.

The local jobless rate in October was 2.7%, four-tenths of a percentage point higher than the historic low recorded earlier in the year. The report said there’s probably a correlation between the region’s strong employment and more young people choosing to work rather than attend college. College enrollment among people ages 18 to 24 is down across the U.S., but the decline has been sharper in central Arkansas.

Job growth was the highest in leisure and hospitality, health and education. The growth in health suggests the resumption of routine health-screening activities that lapsed during the pandemic, as well as rising health needs of an aging population, according to the report.

Sectors with fewer jobs included finance, where businesses may have downsized due to higher interest rates, fewer construction starts and a general slowdown in loan growth. Still, the local finance sector has seen above-average job growth since 2019.

The report notes that recent job losses in retail may stem from labor shortages and a downshift in consumer spending. Regional retail sales have been essentially flat since 2021.

A demographic trend that’s shrinking the national workforce is also expected to have an impact on the Little Rock region. As baby boomers retire, a labor shortage will be one of the region’s primary economic challenges in the years to come, the report said.

And even though the area’s population is slightly younger than the U.S. average, its share of workers age 25 to 64 has declined in recent years.

“If you employ people, do not take them for granted,” the report said.

Housing slowdown

Rising interest rates had a chilling effect on housing construction in central Arkansas in the first half of 2023, in line with national trends, the report said.

Single-family housing starts fell to 667, the fewest since the first half of 2017. The decline was the sharpest in Benton and North Little Rock, falling by more than half in both cities. In Little Rock, starts decreased from 212 to 163.

Increases were recorded in Maumelle, Bryant, Jacksonville and Sherwood.

Multifamily housing construction also slowed in the region. The report said there were 468 starts in the first half of 2023, the fewest in five years. The only sizeable new complex was a 360-unit project at Rockwater Village in North Little Rock. The rest of new multifamily construction consisted of duplexes and other small projects.

Single-family permit median values for the region hit a new peak in 2022 of $246,805, but median value by city varies substantially. The median for new homes was well over $300,000 in Maumelle and Little Rock in 2022, while homes were being built for $150,000 and under in Conway, Jacksonville and North Little Rock.

Total construction investment has trended downward from its strong pandemic recovery in 2021, but continues to perform better than in the early 2010s, even after being adjusted for inflation, according to the report.

Residential construction was down from a recent peak of $707 million in 2021 to $568 million in 2022, reflecting pressures from interest rates.

Non-residential construction ticked upward from $491 million in 2021 to $587 million in 2022, but was still far below the peak of near $1 billion in 2020. But that year, the report notes, is when Amazon constructed two massive warehouses in Little Rock and North Little Rock.

Economic outlook

The report states that central Arkansas’ historically stable economy has a fair chance to continue its steady growth in 2024 if inflation continues falling and the Federal Reserve cuts interest rates.

With home prices high, even in the region’s comparatively affordable housing market, the prospect for multifamily housing construction is likely to strengthen while single-family construction will remain slow.