Forecasting falling jobless rate in Arkansas

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Arkansas' unemployment rate should drop as the state replaces jobs lost in the manufacturing sector with service-sector jobs, a university economist says. The quarterly forecast by John Shelnutt, senior research economist at the University of Arkansas at Little Rock's Institute of Economic Advancement, was released Wednesday by UALR. In the report, titled "Relying on Services for Job Recovery," Shelnutt says Arkansas, like the rest of the country, is slowly recovering from major manufacturing job losses. His report said revised figures for 2003 show a job loss of 0.2 of 1 percent in the state last year. Shelnutt predicted the state should see a gain of 0.7 of 1 percent in jobs this year. The state's unemployment rate should decline from 6.2 percent in 2003 to 5.3 percent in 2004, Shelnutt said. No job gains are expected in the state's manufacturing base, with the increase coming in the service sector, such as retail sales, where pay can be lower than at manufacturing plants, he said.

The extended outlook for Arkansas calls for a moderate pace of return to the growth that has characterized the state's economy over the past several years. A housing boom that the state has been undergoing will continue, Shelnutt said, but at a slightly lower rate that will still represent a "healthy level of activity." Shelnutt said the most significant risk ahead for Arkansas is a retrenchment in business investment over the next few years. "The overall signal of modest recovery back to the long-run averages for economic growth continues to characterize the recovery, despite an overwhelming array of stimulus from a variety of policy measures and cyclical forces," Shelnutt said.

The article discusses the recent drop in the unemployment rate in Arkansas. Analysts expect the economy to improve due to government imposing service related jobs...