The Tucson labor force keeps growing, but the job market shows signs of strain, , according to an analysis from the Eller Business Research Center.

Exhibit 1 presents current Tucson MSA economic indicators.

In June, the non-seasonally adjusted civilian labor force in the Tucson MSA (Pima County) grew by 1.8% over the year, reaching 497,900. This marks the continuation of a steady upward trend, with year-over-year increases recorded each month so far in 2025. In April, the labor force rose 1.0% to 494,800, followed by a 1.3% increase in May to 498,300.

In the Tucson MSA, the non-seasonally adjusted unemployment rate rose by 0.6 percentage points over the year to 4.6% in June. Each month in 2025 so far has recorded a year-over-year increase in the unemployment rate. March saw the greatest jump, rising 1.1 percentage points to 4.1%, followed by a 0.6-point increase in April to 3.5%, and a 0.9-point rise in May to 4.2%. At the state level, the non-seasonally adjusted unemployment rate rose from 3.5% in April to 4.1% in May and 4.5% in June.

Seasonally adjusted nonfarm employment in the Tucson MSA declined slightly in the most recent two months of data. Employment fell 0.5% in May to 398,200, followed by a 0.1% decrease in June to 398,000. In contrast, the January-April period saw consistent month-over-month gains, with employment rising from 396,800 to a peak of 400,100 in April.

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Non-seasonally adjusted nonfarm employment in the Tucson MSA showed year-over-year growth in each of the past three months. Employment rose 0.5% in April to 402,800, followed by 0.3% increases in both May and June, reaching 400,100 and 388,900, respectively.

Among June’s industry-level data, the strongest over-the-year gain in the Tucson MSA was in Mining and Logging, which grew 7.7% to 2,800 jobs. Private Education and Health Services followed with a 5.3% increase, reaching 73,800 jobs. Other notable gains included Financial Activities (+4.1%), Other Services (+3.4%), and Leisure and Hospitality (+2.1%).

On the downside, the largest year-over-year decline arose from Information, which fell 3.9% to 4,900 jobs. Government employment followed, declining 2.9% to 70,200. Additional losses occurred in Construction (-1.9%), Trade, Transportation, and Utilities (-1.2%), and Professional and Business Services (-0.2%).

Retail sales excluding food and gasoline in the Tucson MSA fell 1.3% year-over-year in May, reaching $1.1 billion. Restaurant and Bar sales moved in the opposite direction, climbing 4.8% to $242.2 million. Gasoline sales saw consecutive declines in both May and June, dropping 18.1% in May to $113.5 million and a further 7.7% in June to $106.5 million. Amusements posted the strongest growth in May, surging 18.3% to $16.9 million, while hotel and motel sales slipped 5.6% to $42.2 million.

Building permits in the Tucson MSA have seen notable declines in recent months for both total and single-family units. Total units saw consecutive year-over-year drops of 12.6% in April to 411, 12.7% in May to 406, and 18.7% in June to 373. Single-family units followed a similar pattern, falling 13.3% to 340 in April, 6.1% to 352 in May, and a remarkable 20.1% in June to 322.

The Tucson MSA’s housing market has softened in recent months, with sales and prices reflecting a similar trajectory to the slowdown in building permits. Units sold posted a slight 0.3% year-over-year gain in April to 1,399, before slipping 4.8% in May to 1,393 and another 1.8% in June to 1,204. Median home prices also trended lower, falling 2.4% in April to $365,000, 0.8% in May to $372,000, and 0.1% in June to $365,000.