Arizona’s labor market showed mixed but largely resilient signals in February, as job growth accelerated even while the state’s unemployment rate ticked slightly higher., according to an analysis from the Arizona Office of Economic Opportunity.
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The seasonally adjusted unemployment rate rose to 4.6% in February, up from 4.5% in January, mirroring a similar national trend as the U.S. rate climbed to 4.4%. The increase comes as Arizona’s labor force dipped modestly month over month, declining by more than 13,500 individuals, or 0.4%. Despite that short-term drop, the labor force remains up slightly compared to a year ago.
Beneath the headline numbers, Arizona’s job market delivered strong gains.
Total nonfarm employment increased by 31,200 jobs in February on a not-seasonally adjusted basis—well above the pre-pandemic February average of 25,100 jobs. On a seasonally adjusted basis, employment rose by 11,000 jobs, signaling steady underlying growth.
The private sector led the charge, adding 21,500 jobs, driven by strong hiring in Leisure and Hospitality, which added 8,400 jobs, and Professional and Business Services, which gained 6,900 jobs. Construction, education and other service sectors also posted notable increases, highlighting broad-based momentum across Arizona’s economy.
Government employment also contributed to the monthly gains, adding 9,700 jobs—primarily at the local level.
However, not all sectors shared in the growth. Trade, Transportation and Utilities posted a loss of 3,200 jobs, suggesting continued adjustments in logistics and retail-related industries.
Looking at the longer-term picture, Arizona’s employment growth has softened slightly. Year over year, total nonfarm employment declined by 5,400 jobs, or 0.2%. The private sector remained positive, adding 3,000 jobs over the past year, but that was offset by a decline of 8,400 government jobs.
Healthcare continues to stand out as a major growth driver, adding more than 10,000 jobs year over year. Other areas of strength included natural resources, education and professional services.
At the same time, several sectors experienced declines, including construction, financial activities, manufacturing and leisure and hospitality—signaling a more selective and evolving labor market.
Overall, Arizona’s February data reflects an economy that continues to generate jobs, even as broader workforce participation and sector shifts create a more complex employment landscape.
