The Valley led the nation’s major metropolitan areas in job growth in November, according to a study released Monday by an Arizona State University research group.
In a second indicator of local economic strength, the Bank One Economic Outlook Center also said the seasonally adjusted Arizona Business Conditions Index — an indicator of economic activity — rose in December. But the latest data presented a worrisome picture about inflation, said Dawn McLaren, economist for the center.
The Blue Chip Job Growth Update, which is published monthly by the center, said the Valley had the highest yearover-year rate of job growth in November among the 28 metro areas with more than 1 million workers. The Valley posted a 3.1 percent gain in number of nonfarm jobs between November 2003 and November 2004, which equated to 51,600 new jobs, the center said.
The Valley beat St. Louis, which had a 3 percent gain, and northern Virginia’s 2.8 percent increase.
The update is based on data produced by the U.S. Bureau of Labor Statistics.
The Valley has consistently ranked among the top five job producers, but November was the first month in 2004 in which the Valley hit No. 1, McLaren said.
She said the figures indicate the local economy is generating enough jobs to support the heavy influx of newcomers.
Many of the job gains were concentrated in the construction sector. A total of 14,500 construction jobs were created during the 12-month period, at 10.6 percent increase.
Other sectors with strong gains were education and health services, up 4.2 percent, and business services, up 3.7 percent. The number of jobs in the manu- facturing sector was up only .1 percent, but it the first month since January 2001 in which any increase was reported, McLaren said.
Meanwhile, the business conditions index rose to 64.6 in December from 61.4 in November — marking the 20th consecutive month that the index stood above the crucial 50 reading, McLaren said.
An index reading over 50 indicates the local economy is growing. Below 50 indicates a near-term economic slowdown.
The index is derived from a survey of purchasing managers at Arizona companies, who are asked each month about purchasing activity, delivery times, employment, new orders, production, inventory levels and materials prices they are experiencing.
McLaren said the December results are a good harbinger for the state’s economy in the near future. "We don’t yet see anything that points to the down side," she said. "This index is a good indicator if a recession is coming, so for six months out it looks good."
Most of the individual components in the index showed strength in December. The employment subindex, which had been lagging during the recovery, reached 65.2, indicating a good job market. The only component to falter slightly was new orders, which slipped .1 from November to 64.2 in December.
The one component that concerns McLaren is the price sub-index, which stood at 73.6 in December, the fourth time in the past six months that the component was above 70. The numbers indicate many businesses are continuing to pay higher prices for their supplies, and the added cost may be passed along to consumers, McLaren said.
"If it’s a temporary (price) shock, they can just absorb it themselves," she said. "But when it starts to look like a permanent change, we need to start worrying." Still, McLaren said it will take awhile for higher prices to put a brake on the economy.