Jul 22, 2022 - Business

Arizona's slight increase in unemployment is no cause for alarm

Unemployment rates in Arizona and the U.S.

Arizona's unemployment rate saw a slight uptick in June, the first increase the state has seen since April 2020, when the start of the pandemic triggered massive job losses.

Driving the news: The seasonally adjusted unemployment rate in Arizona jumped by one-tenth of a percentage point from May to June, to 3.3%, according to the monthly jobs report from the state's Office of Economic Opportunity (OEO).

Yes, but: The 3.2% May unemployment rate was the lowest on record since 1976.

  • The minor increase in Arizona's unemployment rate still kept it below the national rate of 3.6%, which was unchanged from the previous month.

Why it matters: Economic research administrator Doug Walls, who compiled the report, tells Axios Phoenix that it's unclear exactly what drove the minor increase. It could be a one-month fluctuation, it could be a sign of a coming economic downturn, or it could be something in between.

Context: Walls says multiple factors signal it was just a monthly fluctuation.

  • Unemployment insurance claims increased, but only because the end of the school year caused seasonal job loss, he says.
  • Arizona saw a month-over-month increase in private sector jobs.

What he's saying: "There's been a lot of news coverage around macro-level events on a national or global (level), and some challenges on those levels. So I don't want to completely dismiss the change this month," Walls says. "But we would have to get a couple months in a row and just see some of these other economic indicators trending in that direction before we really … start to see a changing narrative."

Between the lines: According to the OEO, non-farm employment lost 31,900 jobs in June, which was driven by a loss of 36,800 government jobs, primarily in education.

  • Those job losses strictly a result of the end of the school year in May, and they are expected to return when the 2022-23 academic year begins in August.
Arizona job gains and losses, by sector
Data: Arizona Office of Economic Opportunity; Chart: Baidi Wang/Axios

The good news: Private sector employment saw modest gains last month, with 4,900 new jobs.

  • The biggest gains were in manufacturing, construction and financial services.
  • Seven of the 11 major sectors measured by the OEO saw job gains last month.
  • Those gains were offset a little by minor losses elsewhere in the private sector, primarily in leisure and hospitality, and in health services and education.

Year over year, non-farm employment increased by 104,400 jobs.

  • Those gains were all in the private sector, while government lost 100 jobs.
  • Since hitting its low point in April 2020 due to the pandemic, Arizona's labor force has grown by 184,769, or 5.4%.
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