AZ Big Media Here’s how Arizona’s job market remains tight


Arizona’s seasonally adjusted unemployment rate rose to 3.3% in June from 3.2% in May. This rate was slightly lower than the national rate of 3.6%. Arizona’s rate remains very low, signaling an extremely tight labor market.

The state added 15,000 jobs in June (seasonally adjusted), compared with a revised gain of 7,000 in May. May’s growth was revised up from 5,800 in the preliminary estimate.

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Employment gains during the month were led by government (up 8,900), education and health services (up 3,100), leisure and hospitality (up 1,200), manufacturing (up 1,000), construction (up 800), professional and business services (up 600), financial activities (up 400) and information (up 300). Trade, transportation and utilities lost 1,200 jobs while other services lost 100. Jobs held steady in natural resources and mining.

In June, jobs in Arizona were 67,500 higher than their February 2020 level. Piece 1 shows how this breaks down by industry. Government jobs fell by 10,500 over the period, with the weakness concentrated in state and local governments. Jobs in recreation and hospitality fell by 9,600, with accommodation and food services accounting for most of the gap.

In contrast, jobs in trade, transportation and utilities increased by 49,100, with most of the growth in transportation and warehousing, as well as retail trade. Financial activities increased by 11,400 compared to February 2020, followed by manufacturing (up 9,900), construction (up 6,500), education and health services (up 5,800), professional and business services (up 3,400) and information (up 1,500). Jobs in other services and natural resources and mining were close to their February 2020 level.

Exhibit 1: Arizona jobs by industry, change from February 220 to June 2022, seasonally adjusted, in thousands

Phoenix MSA jobs increased by 70,900 from February 2020 to June 2022. Piece 2 shows how this growth has been distributed across sectors.

Exhibit 2: Phoenix MSA jobs by industry, change from February 2020 to June 2022, seasonally adjusted

In contrast, Tucson MSA employment decreased by 5,500 from February 2020 to June 2022. Piece 3 shows how this was distributed across industries. The trend was somewhat similar in the state and Phoenix, with the notable exception of professional and business services. This sector remained 6,200 jobs below February 2020 in Tucson, while statewide and Phoenix more than recovered. The variance in Tucson is primarily due to losses in a sector that includes call centers, employment agencies and building services (such as janitorial services). This matters because if this sector had worked in Tucson like it did statewide or in Phoenix or even nationally, then Tucson jobs would have returned to pre-pandemic levels. Moreover, job losses of this magnitude did not make headlines in Tucson. It is unclear what drives this result in the data.

Exhibit 3: Tucson MSA jobs by industry, change from February 2020 to June 2022, seasonally adjusted, in thousands

While Arizona has more than replaced all of the jobs lost in the early months of the pandemic, jobs remain 129,000 below where they likely would have been had the state been able to maintain its average growth over the past the period 2015-2019. Still work to do.

George W. Hammond, Ph.D., is Director and Research Professor at the Economics and Business Research Center (EBRC).


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