Arizona's job forecast nearly flat - Ahwatukee Foothills News: Valley And State

Arizona's job forecast nearly flat

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Posted: Saturday, May 11, 2013 12:00 am | Updated: 7:25 pm, Fri May 24, 2013.

Arizona's economic recovery is flattening out statewide, with job growth outside the Phoenix metro area for this year and next predicted to be anemic.

New figures Thursday from the state Department of Administration forecast the state adding 45,900 jobs this year. That is a drop from the 48,900 for 2012.

And virtually all of that growth -- 1.9 percent year over year -- is anticipated to be in the Phoenix metro area which consists of Maricopa and Pinal counties.

Pima County is anticipated to add just 3,000 jobs all year. And the other 12 counties will see employment growth of just 2,700.

But that's only half of the economic story.

Fully 40 percent of this year's Pima job growth and more than half for the rural counties will be in the leisure and hospitality sector, including bars, restaurants and, to a lesser extent, hotels and motels. And Aruna Murthy, the agency's director of economic analysis, acknowledged these are among the lowest paying jobs in the state.

Murthy's Thursday forecast is a bit more pessimistic than the one she made just last October. At that time she figured Arizona would add 11,400 more jobs.

What happened since then, she said, is the economy got hit by a couple of trucks.

One is the hike in federal payroll taxes. That left consumers with less money in their paychecks -- and less to spend.

The other is the sequestration of federal dollars, resulting in mandatory spending cuts. And Murthy said Arizona is particularly sensitive to what goes on in Washington, with 6.7 percent of the state gross domestic product coming from federal spending.

She said Southern Arizona is going to be hit particularly hard what with dependence not only on military bases and the civilian employment that goes with them but also the presence of aerospace companies which are heavily dependent on federal spending. In fact, Murthy said, the aerospace industry in Pima County is continuing to lose jobs, though not as sharply as in some prior months.

All that has a ripple effect: Smaller paychecks and slower job growth means less money for consumers to spend. And Murthy said that, outside the Phoenix metro area, growth in the retail trade sector this year looks "pathetic.''

The one saving factor for Pima County appears to be government employment. Murthy predicts that will grow by about 1,200 this year, with much of that due to the presence of the University of Arizona.

Murthy's report underscores the ongoing trend where the Phoenix area continues to have an outsized share of the Arizona economy.

She figures of the jobs to be added this year, 40,200 of them will be in Maricopa and Pinal counties. That's nearly 88 percent of new workers for two counties that comprise just about 66 percent of the current population.

And the forecast for 2014 is little different: 51,800 new jobs for Arizona, with just 3,900 of them in Pima County and 4,600 for the balance of the state.

Murthy was almost apologetic for the lukewarm predictions for Pima County.

"I wish (for) Tucson I could sell a better story,'' she said. "But, unfortunately, we are not finding anything really,'' Murthy continued, saying prospects will not brighten "unless good industries move there.''

And, as if to offer some encouragement, she added, "It's a great place to live.''

Not all the factors built into Murthy's forecast of slower job growth are related to payroll taxes and federal spending.

She notes that corporate profits are up pretty much nationwide.

"But we are not seeing corresponding investment,'' Murthy said. Instead, she said, companies are simply holding on to their profits.

One brighter sign is a slow resurgence in the number of permits for new single family houses.

Murthy said that should help the state's beleaguered construction industry.

She forecasts employment in that sector should hit 127,900 by the end of 2014, up 12,200 over two years. But that still would leave the number of people working in construction at just 52 percent of when it hit its peak in June 2006.

Here, too, the lion's share is going to be in the Phoenix area. Pima County is predicted to add 1,400 construction jobs in 2013 and 2014; the number in the balance of the state is just 900.

Murthy also cautioned that international factors could affect her predictions. That includes slowing growth in China and Latin America which would reduce the demand for U.S. exports.

She also is keeping an eye on the debt crisis in Europe. But Murthy said Arizona's exposure to those problems is low as companies here export little to countries in the European Union.

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