Phoenix year-over-year employment growth is slowing down. Area employment grew 2.8 percent in 2013, but is expected to increase by only 1.8 percent this year. The outlook for Phoenix area employment remains positive heading into 2015 as the effects of the federal spending sequestration on defense-related industries continue to fade. Also, as the overall U.S. economy continues to recover, spillover into regional tourism and retirement related industries will be a boost for the Phoenix economy.
The housing market is a major accelerator of economic growth for the region. Housing inventory is beginning to accumulate while institutional buyers see less opportunity for a good deal. Single-family housing starts declined 8.6 percent in June compared to June 2013, indicating a reluctance amongst builders to get too far in front of demand. The decrease in demand from institutional buyers, along with the increased inventory is helping Phoenix area home prices to moderate. According to the Case-Shiller Home Price Index, Phoenix area home prices slowed from 9.6 percent year-over-year growth in April to 8.1 percent in May. Sustained income growth along with loosening of credit standards and relatively low mortgage rates will strengthen the housing recovery in the region and ease the transition to a more traditional home-buyer-based demand.
The Greater Phoenix Economic Council notched a win in July with the World Trade Organization ruling opposing tariffs on Chinese-manufactured solar panels. This counters the International Trade Commissions 2012 imposition of tariffs on photovoltaic cells and modules manufactured in China. GPEC opposed the 2012 tariffs due to the negative impact on Phoenix’s growing solar industry. According to the Solar Energy Industries Association, Arizona houses more than 330 solar companies with an associated 8,500 employees. GPEC is waiting to see whether the U.S. policy response will align with the new WTO ruling.
Click here for the complete Phoenix MSA Regional Economic Update: Phoenix 2014Q2.