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Jobless rate drops, signs abound of continued improvement

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Arizona’s construction industry may finally be showing some real signs of life.

New figures Thursday from the Office of Economic Opportunity show total construction employment hit 142,200 last month. That’s 6.2 percent higher than the same time a year ago — the biggest year-over-year jump of any sector of the state economy.

In fact, construction employers added another 1,000 workers just last month.

What makes that significant is that November is typically a slower time for construction. Since the end of the recession the average month-over-month loss this time of year is about 1,100 jobs.

And there are signs that the situation will continue to improve.

Doug Walls, the agency’s research administrator, pointed to an increase in permits for new single-family construction. He also cited higher selling prices, an indicator of increasing demand.

Still, the industry has a long way to go to get back to pre-recession levels. It remains at just 58 percent off the peak it hit in June 2006 when construction employment reached 244,300.

Overall, Arizona added 28,100 private sector jobs last month. That was enough to drop the state’s seasonally adjusted jobless rate for November two-tenths of a point from October, to 4.3 percent.

The U.S. unemployment rate remained at 4.1 percent.

Other than construction, the strongest sector of the economy remains in eating and drinking places, with 12,100 more people working at bars and restaurants now than a year ago. That translates out to a 5.3 percent annual growth rate.

At the opposite extreme, employment in the state’s information sector declined by 5.6 percent in the past year. Walls said the loss appears to be among companies who do data processing and data housing.

Not surprisingly, retailers added 13,000 jobs between October and November as they ramp up for the holiday season. But even here, employment levels remain below where they were a year ago, likely because of competition from online retailers.

Aside from the 0.2-point decline in the overall employment rate, Walls said there are other signs of an improving economy.

The rate of “discouraged workers” declined from 5.4 percent in the second quarter of the year to 5.0 percent in the third quarter. These are people who had previously been employed but have stopped looking because they cannot find jobs.

At its 2010 peak, discouraged workers amounted to more than 11 percent of the labor force.

There’s a similar decline in the number of people who are looking for full-time employment but say they can only find part-time work. That figure went from 10.5 percent in the second quarter to 9.9 percent in the most recent quarter.

That figure peaked in Arizona in 2010 at 18.7 percent.

Every area of the state is doing better now than a year ago with the significant exception of Pima County. The latest figures show there are 2,500 fewer private sector employees now than a year ago, with declines in virtually all areas with the exception of bars and restaurants.

But George Hammond, economist at the University of Arizona, said there’s reason to believe those figures are inaccurate.

The numbers come from a survey of approximately one out of every three employers, a list of companies that can change from month to month. By contrast, the U.S. Bureau of Labor Statistics does a quarterly survey of all businesses.

Hammond said the differences can be stark. More to the point, he expects that when the state revises its figures early next year, using the data from what’s called the Quarterly Census of Employment and Wages, the number of jobs in Pima County is likely to be higher than the state figures show.

He specifically questioned the state data showing a loss of 2,000 jobs in professional and business services over a one-year period, “which is weird, because that’s a sector that normally grows.”

More to the point, Hammond said if those numbers were accurate, it would be big news.

“Normally if something of that magnitude happens in Tucson, we hear about it,” he said. “It’s in the papers. People are talking about it.”

Walls agreed that there’s reason to question the Pima County numbers from his agency’s latest report.

He said the methodology used by the his Office of Economic Opportunity shows zero growth in Pima County between the second quarter of 2016 and the same time this year. But the figure is 1.5 percent using QCEW data.

The “why” behind why that great disparity — which seems to be limited to Pima County — is less clear.

“It’s something in the way they’re working with the sample,” Hammond said of the state figures. And Walls had nothing concrete to explain it.

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