State unemployment rate edges up to 9.4 percent

The state’s jobless rate inched up a tenth of a point last month, to a seasonally adjusted 9.4 percent.

But that appears to be good news.

Aruna Murthy, director of economic analysis for the Arizona Department of Administration, acknowledged that the state shed 22,700 jobs between June and July. That amounts to a 1 percent drop in total employment.

But Murthy said the typical losses at this time of the year average out at 29,700, or about 1.2 percent.

“July typically is a lost month,’’ she said.

For example, bars and restaurants employed 4,800 fewer people in July than the prior month. Murthy said that is a direct reflection of the low rate of summer tourism.

Murthy pointed out, though, that the number of people working in that sector of the economy last month is 4,800 more than July 2010. And the overall number of people working last month statewide is 20,700 higher than last year.

One of the brightest spots in the economy is in what are known as miscellaneous services. And within that, Murthy said the big employment gains appear to be at car repair shops and the freestanding places that do oil changes.

She said that, given the current state of the economy, that’s to be expected.

“Just after recession, as people still are struggling to get into new jobs and the economy is improving, people are spending essentially more on repair,’’ she said.

But Murthy said once the economy really gets back on its feet, people will give up on trying to keep those older cars and trucks on the road and instead buy replacements — and employment at repair shops will drop.

The new report also shows some employment gains in the financial activities sector, a boost attributed at least in part to companies outsourcing their call centers to Arizona.

Murthy said that once the typically lackluster July passes, employment should pick up again in the next few months.

“But the magnitude is what is questionable right now,’’ she said. She said there are various signs on the horizon that could undermine a recovery.

For example, the federal government just announced that the producer price index — an indicator of inflation — went up more than expected. Higher prices, Murthy said, will reduce consumer spending.

One other big potential concern for Arizona is the possibility of cuts in defense spending.

The plan to raise the debt ceiling included a promise to cut $2.1 trillion in federal spending over the next decade. While $800 billion of that was up front, coming up with the balance was left to a “super committee’’ of Congress.

If that committee fails to reach agreement, or Congress does not go along with its plan, then a number of cuts occur automatically, including in defense.

Sector employment in 1,000s

Sector / July 2011 / At its peak*

Total nonfarm / 2,338.1 / 2,713.6

Manufacturing / 151.2 / 187.4

Natural resources & mining / 11.0 / 14.3

Construction / 113.4 / 247.5

Trade, transportation, utilities / 468.2 / 549.2

Information/ 36.5 / 55.6

Financial activities / 164.0 / 187.2

Professional & business services / 336.8 / 408.7

Education & health services / 354.6 / 323.2**

Leisure & hospitality / 254.8 / 279.1

Other services / 89.1 / 102.0

Government (including public education) / 359.1 / 449.0

* Different sectors have different peak dates

** Prior peak in October 2008

Source: Arizona Department of Administration

Unemployment rates

(not seasonally adjusted unless otherwise stated)

Area / July 2011 / June 2011 / July 2010

Arizona (seas adj) / 9.4% / 9.3% / 9.9%

Arizona / 9.7% / 9.9% / 10.4%

Apache / 17.4% / 17.0% / 17.3%

Cochise / 8.8% / 9.1% / 8.9%

Coconino / 8.2% / 8.4% / 8.8%

Gila / 10.6% / 10.9% / 10.9%

Graham / 11.4% / 11.6% / 13.9%

Greenlee / 8.7% / 8.6% / 11.2%

La Paz / 11.3% / 12.0% / 10.6%

Maricopa / 8.5% / 8.8% / 9.4%

Mohave / 10.4% / 10.6% / 11.3%

Navajo / 15.7% / 15.6% / 16.3%

Pima / 8.9% / 9.1% / 9.6%

Pinal / 11.6% / 11.9% / 12.7%

Santa Cruz / 18.0% / 15.7% / 17.7%

Yavapai / 10.1% / 10.4% / 10.7%

Yuma / 30.0% / 27.0% / 29.5%

Source: Arizona Department of Administration