Phoenix’s unemployment has been gradually drifting lower over the past quarter, down to 7.7 percent as of February. This puts the area’s unemployment rate slightly below the national rate of 8.1 percent as of March. Payrolls in Phoenix have also been outpacing the nation, growing at a 2.7 percent clip annually, compared to 1.7 percent growth nationally. Looking ahead, Phoenix should gain employment boost from a mix of short-term and longer-term investments by major corporations in the area. Raytheon Missile Systems, Southern Arizona’s largest employer, recently received a $497 million contract to produce advanced air-combat missile systems. Intel is building a new $5 billion chip facility in Chandler, which will be the most advanced high-volume semiconductor manufacturing site in the world. The project should add roughly 1,000 high-wage manufacturing jobs to the local economy, in addition to the thousands of construction jobs added during the building phase.
Nominal income growth in Phoenix, fueled by a recovering labor market, kept pace with national growth in 2011, rising at a 5.3 percent annual rate, versus 5.1 percent nationally. This pattern should hold in 2012, as large corporations continue to invest locally.
The weak housing market remains a drag on the local economy, although year-over-year price declines have been slowing in recent quarters. After falling 48 percent from their 2006Q4 peak, prices are looking to stabilize and possibly turn positive for 2012 versus 2011. Starts are up somewhat from 2010 lows, helped by modest increases in both single-family and multifamily construction. Credit quality for businesses and individuals has been improving slowly but remains historically high.
Click here for the complete Phoenix MSA Regional Economic Update for 2012Q2: Phoenix2012Q2.