Few Signs of a Turnaround in Arizona’s Labor Market
By Niaoniao You, EBRC Senior Economic Forecaster
Slow jobs growth over the month despite annual gains
The Arizona employment situation continues to show limited signs of improvement, as employers adopt a wait-and-see approach amid policy uncertainties. In addition to increased uncertainty, the underlying labor market is impacted by a shrinking labor force, elevated interest rates, and increased energy costs.
Arizona seasonally-adjusted number of jobs rose 2,000 over the month in May, while the raw (not-seasonally-adjusted) number of jobs decreased by 14,300. The state seasonally-adjusted unemployment rate edged up to 4.8% in May, compared to the unchanged U.S. unemployment rate of 4.3%.
Arizona over-the-month job gains in May were driven by construction (up 2,700), manufacturing (1,000), and financial activities (600). Also increasing in May were jobs in natural resources and mining, trade, transportation, and utilities, and information. Government jobs dropped 10,400 over the month, with private educational services jobs down 3,900, and professional and business services jobs down 3,200.
Over the year in May, nevertheless, Arizona posted respectable jobs gains, up 0.5% (or 16,000 jobs). U.S. jobs were flat over the year. Year-to-date through May, Arizona jobs increased 0.1%, while U.S. jobs trended up by 0.2% over the year through May.
Exhibit 1 shows Arizona job growth by industry (over the year in May, not seasonally adjusted). Over the past 12 months, private education and health services has led gains, supported by smaller increases in professional and business services; other services; natural resources and mining; information; and manufacturing.
Those gains were partly offset by losses in government; financial activities; leisure and hospitality; construction; and trade, transportation, and utilities.
Exhibit 1: Arizona Net Job Change (Thousands) and 2024 Annual Wages per Worker
Phoenix MSA (Maricopa and Pinal counties) jobs rose by 23,600 over the year in May, for 0.3% growth. That outpaced the U.S. at 0.2%. Through May, Phoenix jobs were up 0.3% over the year, outpacing the 0.2% increase nationally.
Similar to the state, Phoenix job gains were driven primarily by private education and health services and professional and business services (Exhibit 2). Government; other services; manufacturing; information; natural resources and mining; and trade, transportation, and utilities also added jobs.
Those gains were partly offset by losses in financial activities; leisure and hospitality; and construction.
Exhibit 2: Phoenix MSA Net Job Change (Thousands) and 2024 Annual Wages per Worker
The Tucson MSA’s job performance has been flat so far this year, with an increase of 100 jobs over the year in May. That translated into a 0.02% increase, well below the national increase of 0.2%. Year to date through May, Tucson jobs were down 0.5%, again below the national increase of 0.2%.
Over the year in May, Tucson jobs increased the most in professional and business services; private education and health services; and other services (Exhibit 3). Natural resources and mining jobs, as well as information jobs, increased slightly.
Tucson jobs were down over the year in May in leisure and hospitality; government; construction; trade, transportation, and utilities; manufacturing; and financial activities.
Exhibit 3: Tucson MSA Net Job Change (Thousands) and 2024 Annual Wages per Worker
The Prescott MSA lost 1,100 jobs over the year in May, which translated into a 1.4% job loss. That was well below the national increase of 0.2%. Year to date through May, Prescott jobs were down 1.4%, again well below the U.S. increase of 0.2%.
Over the year in May, Prescott added 100 jobs in private education and health services (Exhibit 4). Those gains were more than offset by losses in leisure and hospitality; professional and business services; trade, transportation, and utilities; manufacturing; and mining and construction. Jobs were unchanged over the year in information; financial activities; other services; and government.
Exhibit 4: Prescott MSA Net Job Change (Revised) and 2024 Annual Wages per Worker
