Pace of job growth slows in AZ

Forecaster sees just 3,000 new jobs this year in Pima County
2013-05-10T00:00:00Z 2013-05-10T14:40:05Z Pace of job growth slows in AZHoward Fischer Capitol Media Services Arizona Daily Star

PHOENIX - Arizona's economic recovery is flattening out statewide, with job growth outside the Phoenix metro area for this year and next predicted to be anemic.

New figures Thursday from the state Department of Administration forecast the state adding 45,900 jobs this year. That is a drop from the 48,900 for 2012.

Virtually all of that growth - 1.9 percent year over year - is anticipated to be in the Phoenix metro area, which consists of Maricopa and Pinal counties.

Pima County is expected to add just 3,000 jobs all year, compared with 5,300 last year.

And the other 12 counties will see employment growth of just 2,700. But that's only half of the economic story.

Fully 40 percent of this year's Pima County job growth and more than half for the rural counties will be in the leisure and hospitality sector, including bars, restaurants and, to a lesser extent, hotels and motels. These are among the lowest paying jobs in the state, acknowledged Aruna Murthy, the Department of Administration's director of economic analysis.

Murthy's Thursday forecast is a bit more pessimistic than the one she made in October. But since then, the hike in federal payroll taxes left consumers with less to spend. Outside of the Phoenix area, growth in the retail trade sector this year looks "pathetic," she said.

Corporate profits are up pretty much nationwide. "But we are not seeing corresponding investment," she said, as companies are simply holding on to their profits.

Also, the sequestration of federal dollars resulted in mandatory spending cuts. Arizona is particularly sensitive to those cuts, because 6.7 percent of the state gross domestic product comes from federal spending, Murthy said.

She said Southern Arizona will be hit particularly hard because of its military bases and the civilian employment that goes with them, but also the presence of aerospace companies heavily dependent on federal spending. The aerospace industry in Pima County is continuing to lose jobs, Murthy said, though not as sharply as in some prior months.

The one saving factor for Pima County appears to be government employment. Murthy predicts that will grow by about 1,200 this year, mainly due to the presence of the University of Arizona.

Murthy's report underscores the trend of the Phoenix area having an outsized share of the Arizona economy.

She figures that of the Arizona jobs to be added this year, 40,200 will be in Maricopa and Pinal counties. That's nearly 88 percent of new workers for two counties that comprise just about 66 percent of the current population.

And the forecast for 2014 is little different: 51,800 new jobs for Arizona, with just 3,900 of them in Pima County and 4,600 for the balance of the state.

Murthy was almost apologetic for the lukewarm predictions for Pima County.

"I wish (for) Tucson I could tell a better story," she said, but prospects will not brighten "unless good industries move there."

"It's a great place to live," she added, as if to offer encouragement.

One brighter sign is a slow resurgence in the number of permits for new single family houses, which should help the state's beleaguered construction industry. She predicts Arizona employment in that sector should hit 127,900 by the end of 2014, up 12,200 over two years, and still mostly in the Phoenix area. That still would leave the number of people working in construction at just 52 percent of the sector's peak in 2006.

Pima County is predicted to add 1,400 construction jobs in 2013 and 2014; the number in the balance of the state is just 900.

Murthy also cautioned that international factors, including slowing growth in China and Latin America, could affect her predictions if demand drops for U.S. exports.

Employment Forecast

New jobs

Area 2010 2011 2012 2013* 2014*

Statewide (-46,800) 25,600 48,900 45,900 51,800

Phoenix metro+ (-33,100) 25,200 41,500 40,200 43,200

Tucson metro (-7,800) 1,500 5,300 3,000 3,900

Balance of state (-5,900) (1,100) 2,100 2,700 4,600

+ Maricopa and Pinal counties * Forecast

Source: Arizona Department of Administration

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