Arizona Economic Trends

Arizona posted year-over year job growth of 5.6 percent in first quarter 2006, placing the state in second place nationally for the eighth consecutive quarter (see Chart 1). The business services and construction sectors continued to generate the most new jobs as population growth and real estate markets remained robust.

Rapid job growth contributed to a decline in the state’s unemployment rate to 4.4 percent in first quarter 2006, down significantly from its recent peak of 6.2 percent in mid-2002. The Phoenix and Prescott metro areas each reported 4.0 percent unemployment, the lowest rates in the state.

The tightening job market likely contributed to the increase in per capita income for Arizona residents in first quarter 2006. Although the state’s annual per capita personal income of $30,860 remains below the national average of $35,530, the gap has been narrowing and may continue to do so if employers raise wages to attract qualified workers.

Although the high-tech sector has not reported net job gains since 2000, venture capital investment increased in 2005 and early 2006, targeting Internet software and e-commerce companies (see Chart 2). In addition, high-tech exports from Arizona expanded in 2005, suggesting that hiring in this sector may resume.

Source: FDIC State Profiles