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Metro Tucson appears to be losing hundreds of high-paying jobs

Metro Tucson again lagged the rest of the state in job growth in May and appears to be shedding a number of high paying jobs.

The Arizona Office of Economic Opportunity said today that its latest monthly surveys show Tucson and the surrounding area lost 400 jobs, comparing year-over-year (May 2016 to May 2017) data, and that the 0.1-percent job loss was the second worst in the state. The Sierra Vista-Douglas metro area lost 0.3 percent. Tucson's job numbers have  been hovering around the bottom for most of the year.

Yuma led the state in May with a 3.4 percent job gains over the year, followed by metro Phoenix, 2.4 percent; Prescott, 1.9 percent; Arizona, 1.8 percent; Lake Havasu City-Kingman, 1.7 percent; and Flagstaff, 1.1 percent.

The metro Tucson sector that lost the most jobs was professional and business services, where the total fell by 2,800 over the year.  In contrast, Arizona overall gained 9,700 of those jobs over the year, and metro Phoenix added 5,800.

Professional and business service jobs are among the highest paying in the state, with 2016 wages averaging $52,982, according to the University of Arizona’s Eller School of Management.

“That is one of the employment sectors that continues to see employee losses (in Tucson) over the year,” said Doug Walls, research administrator at the economic opportunity office.

But he couldn’t explain why. If state surveys show that certain employers are laying off a lot of people, state officials are prohibited from identifying them. Walls said he expects to get additional data that could shed more light on the sector.

The other major sector from which Tucson lost a lot of jobs —1,200, comparing last May to May 2017 — was retail.

Walls said Tucson is not unique in that because retail losses are also occurring elsewhere in the state and nation. But the May report showed Arizona gaining 600 retail jobs over the year and metro Phoenix, 2,700.

These numbers, however, are subject to annual revisions in March and can change considerably. After federal revisions of the 2016 numbers, Tucson gained 4,700 jobs from 2015 to 2016, for a 1.3 percent growth, according to University of Arizona economist George Hammond.

At a May 31 event, he predicted metro Tucson will gain 1.4 percent jobs this year but he also said Tucson’s job growth has “softened considerably so far this year.”

Metro Tucson added 1,700 jobs in the first quarter for a job growth of .5 percent, according to UA calculations.

The latest state surveys show the fastest growing job sector in Tucson continues to be leisure and hospitality (restaurants, bars, hotels), which gained 2,000 jobs over the year, as of May.  Food and drinking places account for the bulk of those job gains.

Leisure and hospitality jobs paid an average $21,800 in 2016, according to the Eller school.

Tucson also added 700 financial jobs, 500 manufacturing jobs and 200 construction jobs over the year, Walls reported.

Arizona’s unemployment rate increased to 5.1 percent from 5 percent in Apri. The rate is based on a survey that asks people if they were working or looking for work in the past month. The rate apparently ticked up, Walls said, because Arizonans are more confident about finding jobs and have been applying more.

The total number of non-farm jobs in Arizona grew in May by 48,200 or 1.8 percent over the year, Walls reported. Last year, Arizona had a net gain of 68,300 jobs, after federal revisions, according to Hammond.

Tucson’s unemployment rate was slightly better than Arizona but also increased slightly, to 4.6 percent from 4.2 percent in April. The U.S. rate fell to 4.3 percent in May from 4.4 percent in April.

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Economic snapshot of Tucson

Other recently reported economic news shows that home prices and apartment rents are rising and that the retail and office leasing and home building industries are improving. But the news isn't good if you are trying to buy a house or are renting.

  • The median sales price for single-family homes reached $219,900 in May, a 14-percent increase from May 2016. The price for all types of residential units (including manufactured homes and condos) grew almost nine percent to  $195,000 in May, compared with the previous year. (Multiple Listing Service of Southern Arizona, Tucson Association of Realtors)
  • The total residential sales volume grew almost 18 percent to $386 million in May, compared to May 2016. (Multiple Listing Service of Southern Arizona, Tucson Association of Realtors)
  • But fewer homes are being put on the market. Total active listings reached 3,589 in May, a decrease of almost five percent from April and 18.6 percent from May 2016. (Multiple Listing Service of Southern Arizona, Tucson Association of Realtors)
  • Average apartment rents for May jumped 37 percent to $675, compared with a year earlier. (Multiple Listing Service of Southern Arizona, Tucson Association of Realtors)
  • Rising apartment rents and numerous job announcements in recent years continue to lure apartment investors and builders. Developments have surged around downtown Tucson and the University of Arizona. “Rents have doubled and even tripled at some of these locations.”  (Cushman & Wakefield/PICOR)
  • Almost 235,808 square feet of net retail space was leased in the first quarter of 2017, compared with only 40,993 square feet leased in the last quarter of 2016.  And that was despite the addition nine new buildings totaling 235,958 square feet.  But new retail space is increasingly being absorbed by service businesses, and not traditional store. For example, retail land across from Tucson Premium Outlets was bought by Northwest Hospital for a freestanding hospital emergency department. (Cushman & Wakefield/PICOR)
  • The overall metro retail vacancy rate was 6.4 percent. Although major retailers such as Sears and Macy’s are downsizing, Tucson’s major malls haven’t lost any major anchors yet. The overall vacancy rate at Tucson malls was 2.7 percent in the first quarter, almost seven percent for power centers and 9.5 percent for other shopping centers. (Cushman & Wakefield/PICOR)
  • For the second consecutive quarter, Tucson’s office vacancies hovered at a seven-year low. The vacancy was 10.6 percent in the first quarter. Tucson’s industrial market did better, with the first-quarter vacancy rate falling to 7.4 percent, its lowest level in nine years.   (Cushman & Wakefield/PICOR)
  • Housing permits in metro Tucson grew 8.7 percent last year over 2015 numbers.  Permits for  multi family construction fell 77 percent. In contrast, metro Phoenix  saw an almost 11 percent increase in single family permits and 76 percent increase in multi family. (UA Eller School of Management).