George Hammond, EBRC Director and Research Professor
Arizona job growth needs to be above 0.2% per month (or 7,300 jobs in December) to close the gap
Arizona added 3,100 seasonally-adjusted jobs in December, after a revised 2,900 job increase in November. The November gain was revised down from 7,000 in the preliminary estimate. Job growth in November and December was roughly one-half of average monthly job growth during the five years before the pandemic began (6,300/month or 0.2%/month).
Arizona’s seasonally-adjusted unemployment rate ticked down in December to 4.0% from 4.1% in November. That was above the national rate of 3.5%.
Leisure and hospitality led all sectors in December, adding 3,500, followed by professional and business services and education and health services (both up 2,300), financial activities (up 2,100), trade, transportation, and utilities (up 1,600), manufacturing (up 800), and natural resources and mining (up 200).
Four sectors registered over-the-month job declines in December. Government jobs (primarily state government) declined by 6,100, followed by other services (down 2,800), construction (down 600), and information (down 200).
With two months of below-average job gains, Arizona has been losing ground to its pre-pandemic trend (Exhibit 1). As the exhibit shows, state jobs were 131,000 below where they would have been in December had the pandemic not occurred. In July 2022, the state was 114,000 jobs below trend. Arizona job growth needs to be above 0.2% per month (or 7,300 jobs in December) to close the gap.
Exhibit 1: Arizona Total Nonfarm Jobs, Actual vs. Trend, Seasonally Adjusted, Thousands
Exhibit 2 shows Arizona job gains by industry from February 2020 to December 2022. All but one sector has regained its pre-pandemic peak, according to the preliminary data. Government jobs remained well below their pre-pandemic level, with weakness evenly distributed across both state and local government. Note as well that manufacturing jobs were up 18,000 in December, with strength in both durable and nondurable goods.
Exhibit 2: Arizona Jobs by Industry, Change From February 2020 to December 2022, Seasonally Adjusted, Thousands
As of December 2022, according to preliminary data, nearly all Arizona metropolitan statistical areas (MSAs) have recovered all of the jobs lost during the first two months of the pandemic (Exhibit 3). Tucson recovered 99.8% of jobs as of December while Sierra Vista-Douglas recovered 81.8%.
Exhibit 3: Arizona Job Replacement Rates for Arizona Metropolitan Statistical Areas
