George W. Hammond, EBRC director and Eller research professor
Arizona is still adding jobs, but the labor market has begun to cool
Arizona added 8,200 seasonally-adjusted jobs over the month in September, which was the largest increase since April. The September gain was up from 7,300 in August (revised). The initial estimate for August was an increase of 6,400.
Most sectors added jobs in September, with private education and health services leading the way with 4,600. Trade, transportation, and utilities added 2,000, followed by manufacturing (1,400), leisure and hospitality (1,200), government (1,100), professional and business services (600), other services (400), financial activities (200), and natural resources and mining (100).
Two sectors lost jobs in September: information (down 1,100) and construction (down 2,300).
Overall, Arizona jobs were up 178,700 from February 2020 in September. All sectors except information were up from their pre-pandemic level (Exhibit 1). Phoenix MSA jobs were up 158,500 in September and Tucson jobs were up 5,600. Prescott MSA jobs were up 3,500.
Exhibit 1: Arizona Jobs by Industry, Change From February 2020 to September 2023, Seasonally Adjusted, Thousands
Over the year, Arizona jobs rose 67,300 in September for 2.2% growth, slightly above the U.S. pace of 2.1%. As Exhibit 2 shows, over-the-year growth was led by private education and health services, government, and leisure and hospitality. Information, other services, and manufacturing dropped modestly. The exhibit also shows 2022 annual wages per worker (QCEW data) by industry. Of the three top sectors, leisure and hospitality and private education and health service pay was below the average across all sectors, while government paid slightly above average. The Arizona all-industries average in 2022 was $64,733. Keep in mind that this measure excludes fringe benefits.
Phoenix MSA jobs rose 51,700 over the year in September (2.2%), while Tucson MSA jobs increased 6,400 (1.6%). Prescott MSA jobs rose 800 (1.1%).
Exhibit 2: Arizona Net Job Change and 2022 Annual Wages per Worker
Arizona’s labor market loosened modestly in recent months, according to the preliminary data. The state unemployment rate rose from 3.8% in August to 4.0% in September. That was the fourth consecutive increase since May, when the state rate was 3.4%. The national rate in September was 3.8%.
Exhibit 3 shows additional evidence of loosening in the state labor market from the Job Openings and Labor Turnover Survey (JOLTS). It shows smoothed quit and hire rates. Both have peaked and have been trending down since last year. These are heavily smoothed series (twelve-month moving averages). The raw monthly data suggests that both quit and hire rates have declined back to pre-pandemic levels.
Exhibit 3: Arizona Quit and Hire Rates Have Declined, Twelve-Month Moving Averages, Seasonally Adjusted, Percent
