It’s been a few months since we published an in-depth look at Arizona’s employment report, and with new numbers out last week from the state Office of Economic Opportunity it is worth taking another look at the state’s labor market.
This month’s headline numbers
- Unemployment rate increased to 3.5 percent;
- Labor force decreased by 616 individuals;
- 11,200 new jobs across all sectors (7,300 government; 3,900 private sector).
What not to like
A slight uptick in the unemployment rate wouldn’t be alarming on its own, but this is now the second increase in three months and comes at a time when the national unemployment rate is actually decreasing. The labor force—the pool of people 16 or older who are either working or actively looking for work—has grown over the past year, but that growth rate has slowed over the past few months, and the labor force actually shrank last month. A shrinking labor force could be a warning sign for the state’s economy, perhaps caused by discouraged workers giving up on their job search, thereby leaving the labor force.
While the headline number of new jobs last month initially looks great, of the 11,200 jobs, nearly 2/3 of them were government jobs, with private sector growth significantly slower. We’ve raised concerns in the past about the alarming rate at which government jobs at all levels have grown under Governor Katie Hobbs. This month, the jump in government jobs is primarily the result of public-school teachers returning to work after summer vacation. Although it is notable that this marks the highest level of government jobs in Arizona ever.
More notable than the total number of government jobs is the silence this month about “private sector growth” from the Hobbs Administration, which last month was eager to tout 99 percent of year-over-year job growth being private due to the seasonal dip in government hiring. With the addition of this month’s numbers, less than 83 percent of new jobs in the past year were in the private sector, which falls well short of the level when Hobbs entered office (87 percent). As seen in the chart above, growth in government jobs continues to outpace the private sector since Hobbs took office, despite the summer vacation dip.
Manufacturing also remains a major concern in this month’s jobs numbers. For the 5th straight month, manufacturing jobs declined, leaving the industry down 2,400 jobs this year. Arizona has lost 3,100 jobs over the past 12 months, which ranks 45 among all states for manufacturing growth. For comparison, neighboring state Nevada, led by Republican Governor Joe Lombardo, ranks number 2, with 4.6 percent manufacturing growth versus Arizona’s losses.
What to like
Despite national unemployment decreasing and state unemployment increasing, Arizona’s rate is still a few ticks below the national rate. If they continue to converge between now and the end of the year, it may be cause for alarm. Construction jobs dropped marginally this month but have largely rebounded after a series of poor monthly reports in the spring, and the industry is now slightly up in 2024.