Arizona reports job losses and increased unemployment rate
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Arizona's latest employment report shows a softening labor market, year-over-year job losses and a modestly increasing unemployment rate.
Why it matters: The new numbers illustrate a "notable shift from the state's historical trend of steady growth," said Doug Walls, labor information director for the Arizona Office of Economic Opportunity.
By the numbers: The month-over-month unemployment rate increased from 3.8% in December to 3.9% in January. It was 3.5% in January 2024.
- The state also saw 5,400 fewer jobs this past January than it recorded in January 2024. It was only the second year-over-year job loss reported since 2021.
The fine print: The report, released last week, also revealed that job growth last year was weaker than had previously been reported.
- The monthly reports use data estimates based on surveys of employers. Once per year, the U.S. Department of Labor revises the estimates based on a much more accurate employer census.
- The revisions indicated Arizona gained about 24,800 jobs between December 2023 and December 2024 — not 48,000 as had been estimated.
Context: Reported job losses didn't significantly drive up the employment rate (3.9% is still historically low), which could indicate that fewer employers are backfilling vacated positions, Walls tells us.
- This could be a sign of slowing consumer demand or broader economic uncertainty, he said.
The other side: There were some bright spots in the latest labor report.
- The state saw more people enter the job market between December and January, which typically indicates that job-seekers are more optimistic about their prospects, Walls said.
- The health care industry continued to see significant job growth, which is part of the reason the Office of Opportunity is still forecasting economic growth in the state through at least 2026, despite the softening labor market, he said.
What we're watching: Construction is one industry showing multiple indications of a slowdown, Walls said.
- In addition to job losses, the state is seeing higher rental vacancy rates and fewer residential building permits being issued, both signs of decreased construction demand.