George W. Hammond, EBRC director and Eller research professor
Arizona’s labor market has begun to loosen modestly
Arizona added 1,400 seasonally-adjusted jobs over the month in July, down from a revised increase of 2,700 in June. The June estimate was revised down slightly from 2,800.
Leading the job gains in July were government (up 5,100), construction (up 1,700), private education and health services (up 1,100), and financial activities (up 800). In contrast, professional and business services jobs dropped by 4,500, followed by leisure and hospitality (down 1,100), trade, transportation, and utilities (down 800), manufacturing (down 700), and other services (down 400). Jobs in information and natural resources and mining were little changed over the month.
The increase in government jobs was driven by a large spike in local government, which rose 4,200. That was the largest increase in local government employment since the pandemic began and was driven by education. Further, as Exhibit 1 shows, that was enough to put government employment in Arizona above its pre-pandemic level.
As of July, jobs in only one major industry in Arizona were still below their February 2020 value: information. Even then, information jobs were down just 200.
Overall, Arizona jobs in July were 164,800 above their February 2020 level. Jobs in Phoenix were up 154,800 and Tucson jobs were up 4,700. Yavapai County jobs exceeded their pre-pandemic level by 3,300.
Exhibit 1: Arizona Jobs by Industry, Change From February 2020 to July 2023, Seasonally Adjusted, Thousands
The Arizona seasonally-adjusted unemployment rate rose modestly in July to 3.6%, up from 3.5% in June. The state rate was just above the nation at 3.5%. As Exhibit 2 shows, the state unemployment rate remained very low.
Exhibit 2: Arizona and U.S. Unemployment Rates, Seasonally Adjusted, Percent
While the state and national unemployment rates show continued labor market tightness, the latest Job Openings and Labor Market Turnover Survey (JOLTS) data suggest that there has been a modest loosening during late 2022 and early 2023. One way to see this is the ratio of job openings to unemployment. Exhibit 3 shows the ratios for Arizona and the U.S. Note that for both the ratio has come down from a peak near 2.0 to the range of 1.6 or below.
Exhibit 3: Arizona and U.S. Job Openings per Unemployed Resident, Seasonally Adjusted
