Arizona Economy On Positive Course Despite Q1 Slow Down

Revised Arizona payroll employment data were mixed. Starting with the positive, the Bureau of Labor Statistics annual revision indicated that Arizona added 69,700 jobs last year. This is twice the amount of jobs in 2016 than the original data implied. However, Arizona job growth unexpectedly slowed in the Q1 of 2017, growing at a 0.7 percent annualized rate. This is the slowest rate since Q3 of 2010 when job growth was negative. The primary culprit in Q1 was weaker-than-expected job growth for private service providers, which makes up about three-fourths of Arizona employment, held down by declines in the administrative and waste, information and retail trade sectors. The relative affordability of Arizona remains a strong incentive for businesses to setup shop inside the state. Therefore, we expect improving private services to support overall job growth for the rest of 2017.

Tourism indicators have also been mixed in Arizona as domestic demand fills in the gap left by international travelers. Total enplanements at Sky Harbor International Airport began trending down at the end of 2015, pulled down by year-over-year declines in international passengers. State hotel occupancy, seasonally adjusted, has remained range bound throughout the latter half of 2016 and the start of 2017. Visitors from Canada and Mexico have been impacted by the relative strengthening of the U.S. dollar against the Canadian dollar and the Mexican peso, which remain 22 and 41 percent, respectively, below their 2014 levels. Demand from domestic travelers will pick up as the overall U.S. economy improves this year, supporting the Arizona tourism industry.

For a PDF version of the complete Arizona Economic Outlook, click here:  AZ_Outlook_0517.



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