Arizona’s Economy Struggles to Generate Jobs
By George Hammond, EBRC Research Professor
Health care jobs continue to drive gains
The Arizona economy is struggling to add jobs, due to greatly reduced hiring. This is likely being caused by heightened federal economic policy uncertainty and uncertainty caused by the war with Iran. In addition to increased uncertainty, the labor market is being adversely impacted by increased tariffs, reduced international migration, increased deportations, elevated interest rates, increased energy costs, and demographic aging.
Arizona seasonally-adjusted jobs rose 8,100 over the month in April, up from a revised 1,900 increase in March. The state seasonally-adjusted unemployment rate was steady over the month in April, at 4.7%. That was slightly above the U.S. rate of 4.3%.
Arizona over-the-month job gains in April were driven by private education and health services (up 2,300); professional and business services (2,200); trade, transportation, and utilities (1,500); and government (900). Also increasing in April were jobs in construction; other services; financial activities; information; and natural resources and mining. Manufacturing jobs were down 400 over the month.
Over the year in April, Arizona jobs were up 0.2% (or 7,700 jobs). U.S. jobs were also up 0.2%. Year-to-date through April, Arizona jobs were down 0.2%. In contrast, U.S. jobs trended up by 0.2% over the year through April.
Exhibit 1 shows Arizona job growth by industry (over the year in April). Over the past 12 months, private education and health services has driven gains, supported by smaller increases in professional and business services; other services; natural resources and mining; and information.
Those gains were partly offset by losses in government; financial activities; leisure and hospitality; construction; trade, transportation, and utilities; and manufacturing.
Exhibit 1: Arizona Net Job Change (Thousands, Revised) and 2024 Annual Wages per Worker
Phoenix MSA (Maricopa and Pinal counties) jobs rose by 15,400 over the year in April, for 0.6% growth. That outpaced the U.S. at 0.2%. Through April, Phoenix jobs were up 0.1% over the year, slower than 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). Other services; information; natural resources and mining; and manufacturing also added jobs.
Those gains were partly offset by losses in financial activities; leisure and hospitality; construction; government; and trade, transportation, and utilities.
Exhibit 2: Phoenix MSA Net Job Change (Thousands, Revised) and 2024 Annual Wages per Worker
The Tucson MSA’s job performance has been weak so far this year, with a loss of 1,500 jobs over the year in April. That translated into a 0.4% decline, well below the national increase of 0.2%. Year to date through April, Tucson jobs were down 0.7%, again below the national increase of 0.2%.
Over the year in April, 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 increased slightly.
Tucson jobs were down over the year in April in leisure and hospitality; government; construction; trade, transportation, and utilities; manufacturing; financial activities; and information.
Exhibit 3: Tucson MSA Net Job Change (Thousands, Revised) and 2024 Annual Wages per Worker
The Prescott MSA lost 1,200 jobs over the year in April, which translated into a 1.6% job loss. That was well below the national increase of 0.2%. Year to date through April, Prescott jobs were down 1.4%, again well below the U.S. increase of 0.2%.
Over the year in April, 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; government; manufacturing; and mining and construction. Jobs were unchanged over the year in trade, transportation, and utilities; information; financial activities; and other services.
Exhibit 4: Prescott MSA Net Job Change (Revised) and 2024 Annual Wages per Worker
