By George W. Hammond, EBRC director and Eller research professor
Arizona jobs were down over the year in January and February
Arizona added 4,300 seasonally-adjusted jobs over the month in February, up from a revised increase of 1,700 in January. The preliminary estimate for January was an increase of 7,400. The state seasonally-adjusted unemployment rate ticked up to 4.0%, slightly higher than January at 3.9%. The national rate was 4.1%.
Over-the-month job gains in February were driven by construction (up 1,200); financial activities (up 1,100); government (up 1,100); and professional and business services (up 900). Other sectors adding jobs last month were manufacturing (up 400); other services (up 400); trade, transportation, and utilities (up 200); and natural resources and mining (up 100).
Jobs were down in February in private education and health services (down 800); leisure and hospitality (down 200); and information (down 100).
Over the year, Arizona jobs were down 13,500 (non-seasonally adjusted) in February. That translated into a decline of 0.4%. The revised January estimate was also down over the year by 0.4%. Nationally, jobs were up 1.3% over the year in February. That was not a good start to the year for the Arizona job market.
Arizona’s mediocre job market performance recently has been puzzling. Weak job gains and job losses, in the revised data, have been combined with only modest increases in the unemployment rate, which has remained in the neighborhood of 4.0%. Layoffs and Initial claims for unemployment insurance have only trended up modestly from very low levels.
Further, seasonally-adjusted household employment has performed differently than the jobs measure. In particular, the performance last year and so far this year indicated stronger employment growth than we have seen in nonfarm payroll jobs.
As Exhibit 1 shows, Arizona’s over-the-year job losses were driven by professional and business services; construction; trade, transportation, and utilities; manufacturing; information; and government. Sectors adding jobs included private education and health services; natural resources and mining; other services; leisure and hospitality; and financial activities.
Exhibit 1: Arizona Net Job Change (Thous.) and 2023 Annual Wages per Worker
Performance was similar in the Phoenix MSA in February, with jobs down 7,500 over the year. That translated into a 0.3% drop. The distribution of job losses was also similar to the state (Exhibit 2).
While Phoenix private education and health services jobs were up 12,600 over the year, with smaller gains in government; other services; natural resources and mining; those gains were more than offset by losses in professional and business services; construction; manufacturing; information; trade, transportation, and utilities; and leisure and hospitality.
Exhibit 2: Phoenix MSA Net Job Change (Thous.) and 2023 Annual Wages per Worker
The pattern of weakness was also similar for the Tucson MSA, with wide-spread losses across industries combined with a few weak gains. Tucson job were down 3,700 over the year in February, for a 0.9% decrease.
As Exhibit 3 shows, government; trade, transportation, and utilities; manufacturing; construction; and professional and business services posted significant losses. Only private education and health services posted significant gains.
Exhibit 3: Tucson MSA Net Job Change (Thous.) and 2023 Annual Wages per Worker
Similarly there were widespread over-the-year job losses in the Prescott MSA in February. In total, jobs were down 1,100 over the year, for a decline of 1.5%.
Sectors losing jobs included government; professional and business services; manufacturing; mining and construction; leisure and hospitality; and trade, transportation, and utilities. Sectors adding jobs were financial activities; private education and health services; and other services.
Exhibit 4: Prescott MSA Net Job Change and 2023 Annual Wages per Worker
