Article originally posted on CoStar on March 29, 2023
Valley Labor Market Builds Momentum To Start 2023
Phoenix started the new year off on a high note, with a net gain of 19,200 nonfarm jobs in January, according to the latest data from the Bureau of Labor Statistics. That figure represents the strongest month-over-month increase in nearly two and a half years, ranking Phoenix as the third-leading market in job growth behind Los Angeles and New York.
The recent boost in employment is an encouraging sign for the local labor market that had previously shown signs of slowing down. Employment growth began to taper in the back half of 2022, adding just 2,300 jobs per month in the final six months of the year. Similarly, unemployment drifted up from an ultra-low rate of 2.8% in April 2022 to 3.2% in December 2022. This weakness became evident in the multifamily market, which saw rents fall to end the year.
The education and health services sector continues to see healthy gains, increasing employment by 6.6% over the last year, leading all other segments. Additionally, leisure and hospitality expanded 6.5% in the past 12 months, as The Valley continues to develop into a major travel destination. Phoenix hosted the Super Bowl last month for the fourth time, setting records for hotel performance.
Despite concerns over inflation and a potential recession, The Valley remains in a strong position to weather an economic disruption, thanks to a diversified economy that includes a broad range of industries. This is a noteworthy change from the 2007 to 2008 global financial crisis, where Phoenix’s over-reliance on sectors related to real estate and household growth led to a prolonged recovery. Conversely, during the pandemic-driven recession, Phoenix was an outperformer, recovering all jobs lost in just 12 months.
Today, The Valley has among the strongest momentum in the country in terms of advanced manufacturing. Firms are investing tens of billions of dollars to set up operations related to semiconductors, electric vehicles, batteries and solar. These factors, along with its position as a key link in national supply chain, supports a positive long-term outlook for the region.