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Tucson's January job growth lagged rest of Arizona

Despite all the job announcements over the past two years from Raytheon, Comcast, Caterpillar and other companies, Tucson’s job growth continues to be weak, especially compared with the rest of the state.

The Arizona Office of Economic Opportunity said Tuesday that Tucson only gained 900 jobs, or .2 percent, from January 2016 to January 2017.

While that is still positive, the percentage growth is the lowest of seven metro areas in the state and less than the state average of two percent. Metro Phoenix, which accounts for 70 percent of the jobs in the state, gobbled up 47,200 jobs for 2.4 percent growth.

And while Tucson is expected to add 10,068 jobs over a two-year period (from second quarter of 2016 through the second quarter of 2018), that 1.3 percent growth is also slowest in the state. Metro Phoenix is expected to gain 2.8 percent, and the rest of the state, 1.5 percent.

Michael Varney, president of the Tucson Metro Chamber, said the news left him stunned.

“Frankly, I’m speechless on that because it wasn’t but a few months ago that Bloomberg published a nice article that said Tucson was the third-fastest growing (in the nation),” he said.

Bloomberg.com reported in August that, based on July numbers, metro Tucson had a 4.2 percent job growth over the year, which placed it third in the nation behind the Ogden and Provo, Utah, metro areas. But since then, Tucson and Pima County’s over-the-year job growth has been steadily falling and was only about half a percentage point in December, according to seasonally adjusted numbers from the U.S. Bureau of Labor Statistics.

Varney said he wouldn’t have guessed the numbers would fall because of a number of job announcements, including 2,000 from Raytheon, 1,000 from Comcast and 600 from Home Goods. Some hires haven’t taken place yet.

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“Either other cities are doing better than we are or their (state’s) numbers are off. I can’t see the state’s numbers matching up in any way with the Bloomberg number,” Varney said.

Most of Tucson’s job gains last year were at hotels, restaurants and bars but they were offset by losses in other areas, especially professional and business services, public schools, retail and mining, according to the state report

“We anticipate growth (in Tucson) primarily in leisure and hospitality, manufacturing and health care. Construction is one of the industries in the Tucson area that has not caught up with Phoenix,” said Doug Walls, research administrator for the economic opportunity office that compiles the monthly reports.

Pima County’s unemployment rate was hiked to 4.8 percent in January, from 4.3 percent in December. Arizona’s rate remained unchanged at 5 percent. That means the number of job seekers grew faster than the number of jobs available or that they qualified for.

The state’s monthly reports are based on results from two surveys of households and businesses. Job data is revised, or benchmarked, at the first of every year to reflect better numbers from actual wages paid and U.S. Census Bureau data.  Tuesday’s data reflect those revisions. Employment numbers were revised going back to 1996, with the greatest changes over the past two years.

After the revisions, Pima County’s leisure and hospitality sector, which include hotels, restaurants and bars, added 2,800 jobs over the year (January to January), more than any other sector. Aerospace manufacturing added 900 positions and health care, 800.

But those gains were offset by losses in professional and business services, which lost 1,700 jobs over the year; government, including public schools, which lost 1,000; retail, down 400, and mining, down 300. The net result was a gain of 900 non-farm jobs.

In contrast, over-the-year job gains elsewhere were: Yuma, 3.5 percent; Prescott, 2.7 percent; Flagstaff, 2.5 percent; metro Phoenix, 2.4 percent; Arizona statewide, 2 percent; U.S. average, 1.5 percent; Lake Havasu City-Kingman, 1.5 percent; Sierra Vista-Douglas, .3 percent.

Revisions point to a better 2016

With the revised numbers, Arizona did better than previously reported in 2016 and worse in 2015. It gained 3,100 more jobs in 2016, for a total of 2.7 million but had 400 fewer positions in 2015.

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The changes gave Arizona 4,300 more jobs in the professional and business services, 4,200 more government jobs and 2,500 more leisure and hospitality jobs and 900 more in manufacturing than previously reported in 2016.

But all other sectors came out worse. The biggest hits were to health services and private education, down 3,500; financial activities, down 2,500 and information jobs, down 2,400.

Arizona expected to add 138k jobs over 2 years

The office also released two-year job projections that are based on past trends and current economic developments. The forecasts cover the period from the second quarter of 2016 through the second quarter of 2018.

Walls said the office took into account President Donald Trump’s request for $54 billion more in military spending but not the possible effects of Arizona’s minimum wage rate. Arizona voters raised the minimum wage to $10 per hour from $8.05 effective in January. It will increase to $12 hourly in 2020.

“With aerospace and defense manufacturing, we have a strong presence in the Tucson area. And based on historic growth, we are projecting that will continue in two years,” he said. Pima County had 11,800 aerospace manufacturing jobs in January.

While several Arizona businesses have said they will have to cut jobs to afford to pay the higher wages, Walls said it will take months to determine the overall effect.

“We will continue to track the effects of the minimum wage, and we will have some updates in the future. But in regards to the short term industry projections, that was not a factor,” he said.

The office forecasts that Arizona will gain 138,553 jobs, or 2.4 percent, over the two  years. Every sector is expected to gain except for natural resources and mining, where jobs are expected to fall by 1 percent.

The strongest gains are expected in construction, 3.9 percent; professional and business services, 3.3 percent; education and health services, 3.3 percent; leisure and hospitality, 2.8 percent and financial activities, 2.7 percent.

Zeroing in on more specific jobs, those with the best prospects for growth in Arizona are: with specialty trade contractors, 8 percent; ambulatory health care, 8; professional scientific and technical services; credit intermediation and related activities; food services and drinking, 6.8 percent; administrative and support services, 6.4 percent, and self employed workers in all fields, 4.8 percent.

Arizona is expected to gain 10,000 retail workers but half of them will be “non-store retail workers” who work behind the scenes in online jobs or at online retail businesses, Walls said.

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