George Hammond, EBRC Director and Research Professor
Almost all sectors of the Arizona economy have recovered
Arizona added 5,700 seasonally-adjusted jobs over the month in February, down from a revised increase of 19,500 in January. The preliminary estimate put January growth at 22,700.
February job gains were driven by leisure and hospitality (up 1,900); trade, transportation, and utilities (up 1,800); education and health services (up 1,500); government (up 1,400); other services (up 1,200); construction (up 1,100); financial activities (up 300); and natural resources and mining (up 100). Jobs in professional and business services dropped by 3,100; information declined by 400; and manufacturing jobs fell by 100.
Arizona’s seasonally-adjusted unemployment rate ticked down to 3.7% in February from 3.8% in January. It was up slightly from February 2022 and close to the national rate of 3.6%.
As Exhibit 1 shows, nearly all sectors in Arizona were well above their pre-pandemic high in February. The one exception remained government, especially local government.
In contrast, trade, transportation, and utilities jobs were up 51,400, with about one-half of the gain in transportation, warehousing, and utilities. Professional and business services job growth was driven primarily by professional and technological services.
Exhibit 1: Arizona Jobs by Industry, Change from February 2020 to February 2023, Seasonally Adjusted, Thousands
Arizona’s recovery has far outpaced the nation. As of February, only seven of the eleven NAICS supersectors had fully recovered to pre-pandemic levels (Exhibit 2). Leisure and hospitality jobs were 410,000 below February 2020, followed by government (down 376,000), other services (down 114,000), and natural resources and mining (down 55,000).
Exhibit 2: U.S. Jobs by Industry, Change from February 2020 to February 2023, Seasonally Adjusted, Thousands
With the release of revised (benchmarked) employment data from the Bureau of Labor Statistics, we now know that all but one Arizona metropolitan statistical area has recovered all of the jobs lost during the first two months of the pandemic (Exhibit 3). Sierra Vista-Douglas has replaced 58.3% of jobs lost, as of February 2023. Flagstaff and Tucson have replaced 104.7% and 107.3%, respectively. Phoenix has replaced 157.7% and Arizona has replaced 145.6%. That far outpaced the national recovery at 113.6%.
Exhibit 3: Job Replacement Rates for Arizona Metropolitan Statistical Areas
