Slower-than-anticipated job growth for the second half of 2006 has led the Arizona Department of Economic Security to scale back its 2006-07 job growth forecast from 256,000 to 228,000 jobs.
In April, nonfarm jobs were forecast to grow at an annual rate of 5.5 percent in 2006 and 4.4 percent in 2007. Those percentages have been revised to 4.9 percent in 2006 and 4 percent in 2007.
“We’re still seeing growth in the economy,” said Don Wehbey, the DES’s senior economist. “This is actually still a pretty good report even though we have revised downward. This still has some pretty good growth in there, especially like professional and business services, and financial activities.”
Strong population growth will continue to fuel nonfarm employment growth across Arizona, according to the DES. Job growth is projected in 10 of 11 major industry groups with information services as the only industry expected to lose jobs.
The top five industries with the biggest projected gains are professional and business services; construction; trade, transportation and utilities; educational and health services; and leisure and hospitality.
“We’re seeing the pressure on interest rates, which hits people’s homes, their debt and everything else, along with higher fuel and energy costs,” Wehbey said. “We’re seeing that as taking out of the disposable income consumers would otherwise have to spend in the economy.”
All of the major industries except information services should follow the trend of slower than expected growth during the second half of this year and further slowing in 2007, Wehbey said.
The DES is anticipating the following job growth through 2007:
• Professional and business services should add more than 58,000 jobs.
• Construction should add more than 40,000 jobs.
• Trade, transportation and utilities should add nearly 40,000 jobs.
• Financial activities should add 15,000 jobs.
• Education and health services should add 22,900 jobs.
• Leisure and hospitality should add nearly 21,000 jobs.
• Government should add nearly 16,000 jobs.
• Other services should add nearly 8,000 jobs.
Arizona factories are expected to add 6,400 jobs for a growth rate of 3.6 percent through 2007. “Overall, this forecast is really suggesting growth, but with a modest or slight revision to that growth,” Wehbey said. “I still expect to see Arizona among the top fastest-growing states. I don’t expect that to change.”