Arizona’s economy won’t look a whole lot different this year and next, with the Department of Administration projecting statewide job growth of 2.1 percent and 2.4 percent those two years.
Arizona’s economy won’t look a whole lot different this year and next amid sluggish employment growth and a slight uptick in low-skilled positions, according to a state forecast released Thursday.
Arizona won’t recoup all the jobs lost in the recession until 2016 or 2017 as employment increases 2.2 percent this year and 2.4 percent next year, said Aruna Murthy, director of economic analysis for the state Department of Administration. The national economy had recovered all of the jobs shed in the recession by last summer.
“I am glad things are not worsening,” Murthy said. “In that sense, this is a good forecast.”
But she and the department’s economic staff reduced their forecasts from those made last year, reflecting factors ranging from subpar Arizona population growth and low household incomes to state-government budget pressures and sluggish foreign economies, including that of China.
The statewide growth numbers forecast for this year and next would be up only slightly from the 2.1 percent level achieved in 2014. They will translate to about 57,000 new jobs this year and 63,000 next year.
“We had anticipated things to really pick up (by now),” Murthy said, adding that an acceleration might be delayed until 2016.
The Phoenix metro area is projected to grow slightly faster than the state overall.
Even though Arizona hasn’t fully recovered from the recession and hasn’t returned to its brisk pace of economic activity from past decades, the state is growing a bit faster than the nation, she said.
Sectors showing the greatest expansion include leisure/hospitality, education/health services and financial services — all with job increases of 3 to 4 percent for 2014, 2015 and 2016. Laggards include information services and government, especially with Arizona’s budget pressures constraining state-government hiring.
The bellwether construction industry should improve from a 1.5 percent job loss last year to gains of 0.5 percent this year and 1.8 percent in 2016, according to the forecast. Manufacturing will go from a 0.1 percent job loss last year to increases of 1.1 percent and 1.8 percent in 2015 and 2016.
But Arizona’s sluggish employment improvement isn’t the only headwind. In addition, more jobs will be added in low-skilled positions that don’t require high education levels but don’t pay especially well, including those in restaurants, hotels and retailing.
“The jobs are out there,” said Allan D’Elosua, a job seeker who lives in Mesa. “The pay is what’s lacking.”
D’Elosua, 60, said he got four interviews for positions in customer service and sales after attending a job fair sponsored by Goodwill this week in downtown Phoenix. From that, D’Elosua said he already has received three offers and expects to start work next week.
Prospective candidates who dress well, have a good demeanor and prepare for interviews stand a good chance of finding something, he said.
More than 3,000 people attended Goodwill’s Greater Phoenix Career Expo in downtown Phoenix this week. Companies in health care, technology and the hospitality business are among those hiring.
Bill Byron, a spokesman for Banner Health, one of Arizona’s largest nongovernment employers with more than 30,000 employees, said competition has become fierce for many positions in the health-care industry. Part of the company’s growth has been fueled by a shift to outpatient managed care and wellness programs, he said.
Murthy said other trends supporting health-care hiring include the aging of the population and more enrollment through the federal Affordable Care Act.
Arizona historically has had a preponderance of less-skilled positions, and that’s not likely to change. In fact, the share of Arizona’s jobs requiring a high school diploma or less is projected to rise from 66.7 percent in 2013 to 66.9 percent by 2016, Murthy said.
Positions requiring a bachelor’s degree only (excluding graduate degrees) will slip from 17.8 percent to 17.5 percent by 2016, according to the forecast.
The Department of Administration forecast is in line with others that have come out recently. For example, BMO Capital Markets earlier in February said it expected payroll jobs in Arizona to rise 2 percent this year and 2.2 percent in 2016, helping to push down the state’s unemployment rate to 6.5 percent this year and 5.8 percent next. (The Department of Administration didn’t provide jobless-rate forecasts.)
However, BMO sees Arizona’s economy growing 3.5 percent this year and 2.9 percent in 2016 — both exceeding forecasted U.S. Gross Domestic Product gains of 3.1 percent and 2.6 percent, respectively. Arizona is in line to benefit from population increases that could bolster the construction industry, by exposure to high-tech manufacturing and other factors, BMO said.
Tom Rex, an economist at the W.P. Carey School of Business at Arizona State University, said he felt the Department of Administration’s update is reasonable as a middle-range forecast. But Rex added that Arizona’s economy could surprise on the upside with greater economic acceleration at some point in the next few years.
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Nonfarm employment totals in Arizona and in various parts of the state are expected to grow at these rates of increase, according to a forecast by the Department of Administration. Figures for 2014 are actual results.
|Arizona||2.1 percent||2.2 percent||2.4 percent|
|Phoenix metro area||2.4 percent||2.5 percent||2.6 percent|
|Tucson metro area||1.4 percent||1.6 percent||1.8 percent|
|Rest of state||1.4 percent||1.6 percent||1.9 percent|