Tucson jobs increased last month, although state and local employment was weak, according to an analysis from the Economic and Business Research Center (EBRC). Here’s a closer look at Arizona jobs.

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Arizona added 11,200 seasonally-seasonally adjusted jobs over the month in September, a big improvement over the revised 1,200 job loss in August. The preliminary estimate put the August job loss at 2,500. Arizona job gains in September were the largest since November 2023.

Arizona’s seasonally-adjusted unemployment rate rose to 3.5% in September, up from 3.4% in August. It remained well below the national rate of 4.1%.

Arizona’s over-the-month job growth in September was driven primarily by government (up 7,300), followed by private education and health services (up 2,600); trade, transportation, and utilities (up 900); information (up 500); professional and business services (up 300); other services (up 300); and natural resources and mining (up 200).

Those gains were partly offset by losses in financial activities (down 300); manufacturing (down 300); leisure and hospitality (down 200); and construction (down 100).

Over the year, Arizona jobs were up 65,900. That translated into 2.1% growth, which was well above U.S. gains at 1.5%. As Exhibit 1 shows, private education and health services contributed the most jobs in September, followed by professional and business services and trade, transportation, and utilities. Jobs were down in manufacturing, leisure and hospitality, and information.

Exhibit 1: Arizona Net Job Change (Thous.) and 2023 Annual Wages per Worker

In September, Phoenix MSA jobs increased 43,500, accounting for roughly two-thirds of state gains. That translated into growth of 1.8%. Tucson MSA jobs were up 2,200 over the year, for 0.5% growth. Prescott MSA jobs rose 1,000, an increase of 1.4%.

Through September, Arizona jobs were up 68,800 from last year, for 2.2% growth (Exhibit 2). That outpaced the U.S. at 1.7%.

Year to date, Phoenix jobs were up by 53,200 or 2.2%, with much of that strength coming in private education and health services. Also contributing significantly were trade, transportation, and utilities; government (primarily state and local); and professional and business services. Leisure and hospitality; information; and manufacturing jobs were down year to date in September.

Exhibit 2: Arizona Year-to-Date Job Growth, Through September, Percent

As Exhibit 2 also shows, Tucson’s over-the-year growth has been much slower than the state and national averages, at 0.9%. Jobs were down over the year for leisure and hospitality; professional and business services; government (state and local); and information. Those losses were more than offset by gains in private education and health services; manufacturing (in contrast to Phoenix and the state); construction; financial activities; trade, transportation, and utilities; natural resources and mining; and other services.

Jobs in the Prescott MSA rose by 1,000 year to date through September (Exhibit 2). That translated into 1.5% growth. Year-to-date gains were driven by government; trade, transportation, and utilities; private education and health services; mining and construction; financial activities; and other services. Those gains were partly offset by losses in leisure and hospitality and professional and business services. Jobs in manufacturing and information were stable over the year.

Arizona’s seasonally-adjusted unemployment rate rose to 3.5% in September, up from 3.4% in August. It remained well below the national rate of 4.1%.

As Exhibit 3 shows, Arizona’s unemployment most recently dipped below the national average in April 2024. This suggests that Arizona’s labor market has tightened while the national labor market loosened modestly. A tight labor market is generally a double-edged sword. On one edge, a tight labor market forces firms to work harder to hire and requires them to raise compensation to attract workers. On the other edge are workers, who find increased job opportunities and rising compensation.

Exhibit 3: Arizona and U.S. Unemployment Rates, Seasonally Adjusted, Percent