Here’s why Arizona jobs recovered faster than the U.S.

Business News | 4 May |

Arizona added 11,700 jobs over the month in February, nearly double the average pace during the five years before the pandemic began.

Arizona added 11,700 seasonally-adjusted nonfarm payroll jobs over the month in February 2022, up from a revised January gain of 10,400. That was nearly double the average pace during the five years before the pandemic began. January growth was originally estimated at 9,700.

In February, professional and services led the way with 3,100 jobs, followed by education and health services (up 3,000); trade, transportation, and utilities (2,800); leisure and hospitality (up 1,600); other services (up 1,300); manufacturing (up 900); and construction (up 500). In contrast, information jobs dropped by 900, followed by government (down 500) and financial activities (down 100). Natural resources and mining jobs were steady over the month.


READ ALSO: Scottsdale ranks No. 1 among most recovered cities from pandemic


Arizona seasonally-adjusted jobs were 37,800 above February 2020 in February 2022. However, as Exhibit 1 shows, not all industries have recovered yet. Government jobs were still down 20,600 and leisure and hospitality jobs were down 14,500. Education and health services jobs were down 4,400 in February 2022, followed by information (down 2,000) and natural resources and mining (down 500).

Trade, transportation, and utilities jobs were up 53,900 in February 2022 compared to two years earlier, followed by financial activities (up 11,000); construction (up 5,700); manufacturing (up 5,200); professional and business services (up 3,100); and other services (up 900).

Exhibit 1: Arizona Jobs by Industry, Change from February 2020 to February 2022, Seasonally Adjusted, Thousands

In the current data, Arizona nonfarm payroll jobs regained their February 2020 (pre-pandemic) peak in December 2021. That was one month later than the preliminary estimates indicated.

Arizona jobs regained their previous peak well before the U.S., which at this point has replaced only 90.4% of the jobs lost from February to April of 2020.  Exhibit 2 gives an indication of how Arizona achieved this result. It shows average over-the-month job growth rates for four periods: 2015 to 2019, February to April 2020, April 2020 to June 2020, and June 2020 to December 2021.

As the exhibit shows, Arizona’s average monthly growth rate during the five years before the pandemic was double the national average (0.2% per month in Arizona versus 0.1% per month nationally). During the February to April 2020 period, when stay-at-home orders were in effect, Arizona’s average monthly job decline was 5.6% per month, compared to 7.3% per month nationally. With the lifting of the stay-at-home order, Arizona’s job growth increased to 2.8% per month from April to June 2020, faster than the national growth rate of 2.7%. From June 2020 until December 2021, Arizona job growth was slower than the national rate (0.5%) at 0.4% per year.

Thus, Arizona replaced the jobs lost during the early months of the pandemic faster than the U.S. primarily because the initial job loss was not as severe as it was nationally. This is likely due to the less restrictive stay-at-home order in Arizona compared to some other states around the country.

Exhibit 2: Arizona and U.S. Average Monthly Job Growth, Percent

 

George W. Hammond, Ph.D., is the director and research professor at the Economic and Business Research Center (EBRC).

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