Forecast: Pima County to lag Phoenix, state in job growth

2012-11-02T00:00:00Z Forecast: Pima County to lag Phoenix, state in job growthHoward Fischer Capitol Media Services Arizona Daily Star
November 02, 2012 12:00 am  • 

PHOENIX - It looks like 2013 will not be a good year to look for a job in Pima County.

A report Thursday by the state Department of Administration predicts Arizona will gain 60,900 jobs in the coming year. But it turns out that just 3,600 of them will be in the Tucson area.

That's an anemic 1 percent year-over-year growth rate locally, compared to a statewide figure of 2.5 percent.

In fact, even removing the rapidly growing Phoenix metro area from the numbers - Maricopa and Pinal counties - the state's 12 rural counties are predicted to add 8,000 jobs in 2013, for a 2.3 percent growth rate.

Aruna Murthy, the agency's director of economic analysis, said her lackluster forecast for the Tucson area is built on several factors.

One is the loss of spring training. The presence of those teams, she said, is a major driver of employment at hotels, bars and restaurants.

The result is that the Tucson area will add just 1,100 jobs in the leisure and hospitality industry this coming year. That should bring total employment in this sector by the end of 2013 to about 41,600 - just about where it was in 2006.

Murthy said her staff finds another big difference between the Tucson metropolitan area its larger cousin to the north: real estate investment - or, in the case of Pima County, the lack thereof. That demand has driven construction jobs in the Phoenix area.

At the same time, population growth in the Tucson area is slower than the rest of the state.

With high vacancy rates in both commercial and residential real estate, the number of new residents is just not enough to absorb all that and create a demand for more. That, in turn, will mean an increase of just 100 construction jobs in 2013, compared with 7,000 statewide.

But one of the inherent problems, she said, is that the population growth needed to fuel housing and retail space demand in Pima County will not occur until there are jobs available for newcomers.

Murthy is not alone in her belief that employment growth in Pima County will lag the Phoenix area and the rest of the state. Economist Dennis Hoffman of Arizona State University said he foresees a similar pattern.

One reason, he said, is the nature of the area economy.

"Tucson dominates Pima," Hoffman said, compared with the Phoenix metro area having several major population and employment centers, as well as a more diverse economy. "The two big engines down there are Raytheon and the University of Arizona."

And the problem, Hoffman said, extends beyond simply being largely dependent on two key employers.

"Raytheon is funded by the Department of Defense and UA by the Arizona Legislature," he said. "Neither source is likely to be increasing budgets in the near term."

Hoffman said while construction growth will remain slow in Southern Arizona, that should be only a temporary situation.

"Once the real estate engine kicks back in over the next several years, the cyclical updraft it will create will bring growth to the entire state," he said.

Murthy stressed that Southern Arizona residents shouldn't take her 2013 job forecast as an indicator that things will never get better.

"Typically, Tucson lags behind Phoenix in terms of when it starts picking jobs up," she said.

She also pointed out that her predictions are based on the patterns that she has seen up to this point. What they do not include, Murthy said, are things yet to develop.

For example, the forecast does not consider a new five-year, $349 million contract Raytheon Missile Systems was awarded last month to provide anti-tank missiles for the military. Murthy said only when any new jobs actually materialize will she be able to take them into account.

The same is true for the proposed Rosemont mine.

One area in which Tucson is expected to do as well as the rest of the state is health care. Murthy anticipates strong growth in the number of people working at doctors' offices, hospitals and emergency care centers.

"Arizona's population is growing, even if it's growing at a slower rate," she said.

"A lot of the baby boomer generation are getting old," Murthy continued. "They will all need health services."

Similarly, Tucson is expected to mirror the rest of the state in areas where the economy is not expected to improve.

Murthy said that employment at private universities and trade schools is likely to decline. Aside from the recent crackdown by the federal government on student loans to some of these institutions, Murthy said it's a matter of simple economics: People go back to school when unemployment is high to get new job skills. And they drop school when they are employed again.

Job growth prediction for 2013

Sector statewide Valley* Pima Balance of state

Manufacturing 2,900 2,000 200 700

Natural resources & mining <100 0 0 0

Construction 7,000 5,300 100 1,600

Trade, transportation, utilities 10,500 8,400 100 2,000

Information 300 500 -200 0

Financial activities 5,400 4,900 300 200

Professional & business services 11,700 9,900 400 1,300

Private education & health services 10,800 8,400 1,400 900

Leisure & hospitality 9,500 7,200 1,100 1,200

Other services -900 -400 -100 -400

Government 3,800 3,100 200 500

Total 60,900 49,300 3,600 8,000

*Includes Maricopa and Pinal counties Source: Arizona Department of Administration

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