George Hammond, EBRC Director and Research Professor
Arizona added 7,000 jobs in November and the unemployment rate ticked up to 4.1%
Arizona seasonally-adjusted jobs rose by 7,000 in November, equal to a revised 7,000 job increase in October. The preliminary October estimate put growth at 7,300. Once again in November, state job growth was close to the average monthly gain during the five years before the pandemic began (6,300 per month).
In November, job growth was driven primarily by education and health services (+4,000), government (+1,600), and leisure and hospitality (+1,500). Professional and business services, manufacturing, financial activities, other services, and natural resources and mining posted smaller gains. In contrast, trade, transportation, and utilities jobs declined by 1,800 over the month with losses concentrated in retail trade. Information posted small losses while construction jobs were stable over the month.
Nearly all Arizona major industries have recovered all of the jobs lost during the first two months of the pandemic (Exhibit 1). As of November, the two exceptions were government (-11,800) and leisure and hospitality (-3,000). Within government, the largest losses remained in local government (-9,800) followed by state government (-2,300). Federal government jobs were up 300. Within leisure and hospitality, the largest losses remained in accommodation and food services (-5,200). Jobs in arts, entertainment, and recreation were above their February 2020 level.
Exhibit 1: Arizona Jobs by Industry, Change From February 2020 to November 2022, Seasonally Adjusted, Thousands
From February 2020 to November 2022, the pattern of job growth by industry in Phoenix was similar to the state. As usual, the pattern is different in Tucson (Exhibit 2), where job gains in trade, transportation, and utilities were offset by losses in professional and business services. Manufacturing jobs in Tucson have increased since the early days of the pandemic and were up by 2,000 in November. Education and health services jobs have also increased. Jobs remain below pre-pandemic levels in government, leisure and hospitality, information, and construction. Jobs in other services, financial activities, and natural resources and mining are near pre-pandemic levels.
The professional and business services sector in Tucson remains far below its pre-pandemic level, while statewide and in Phoenix it has more than recovered. The gap in Tucson is primarily due to losses in a sector that includes call centers, employment agencies, and services to buildings (like janitorial services). It is not clear what is driving this result in the data, but it may be related to shifts in employment practices within the industry that have caused these jobs to no longer be counted in the Tucson establishment survey.
Exhibit 2: Tucson MSA Jobs by Industry, Change From February 2020 to November 2022, Seasonally Adjusted, Thousands
Arizona’s labor market remains tight, but the preliminary unemployment rate data suggest that a gradual loosening has begun. The state’s seasonally-adjusted unemployment rate ticked up to 4.1% in November, from 3.9% in October (Exhibit 3). That was a bit above the national rate of 3.7%, although not (statistically) significantly higher. As state job growth slows next year, the unemployment rate is likely to continue trending up.
Exhibit 3: Arizona and U.S. Unemployment Rates, Seasonally Adjusted, Percent
