Arizona job-loss estimate not as bad as expected
by Betty Beard
The Arizona Republic
Oct. 8, 2010
Thanks to federal stimulus money and better-than-expected hiring in some sectors, Arizona is now predicted to lose only about 1 percent of its jobs this year, the state Department of Commerce said Thursday.
In their twice-a-year forecast, department researchers lowered the number of job losses expected in 2010 to about 25,700, or about half of the 50,400 they predicted in April. They had forecast a 2 percent loss this year.
"Since then, the economy has actually improved," said Aruna Murthy, the department's director of economic analysis. In addition to the stimulus money and improved hiring in the private sector, department economists attributed the improved outlook to a stronger global economy.
Private hiring showed gains as the year progressed, especially in private education and health care, employment services, wholesale trade, restaurants and bars and mining.
The influx of about $255 million in federal stimulus dollars also helped, and the global economy has improved since the April forecast, which came soon after a financial crisis in Greece.
The department forecasts that Arizona will finally see a net job gain in 2011, its first in three years. However, that forecast was downgraded to an expected net increase of 16,500 jobs or 0.7 percent, compared with the spring forecast of 23,100 more jobs and a 1 percent gain.
Murthy said the expected job gains were reduced because the federal stimulus programs will wind down, business and consumer spending is expected to be lackluster, state and local governments still have large deficits, population growth has slowed and banks are still limiting loans to consumers and businesses.
The Phoenix area is expected to do a little better than the state, with a net gain of 13,200 jobs or 0.8 percent next year. Metro Tucson is expected to add only 1,300 jobs next year, and the rest of the state, 2,100, according to the Commerce Department. Other economists also expect the state's job loss to be small this year.
The consensus of 16 Arizona experts surveyed for the Western Blue Chip Economic Forecast publication is for Arizona to lose 0.5 percent of its jobs this year, the state's third consecutive year of job losses.
But Lee McPheters, an Arizona State University economics research professor who edits the Blue Chip forecast, isn't sure the job losses this year will be that small.
He pointed out that Arizona had lost almost 2 percent of its jobs so far and that it would have to make up a lot of lost ground or get a lot more hiring for the rest of the year to end up with a job loss of about 1 percent, as the Commerce Department expects.
Hiring will be challenged this year because the national recovery appears to be losing steam, he said.
Joseph Tuerff, a spokesman for Manpower Inc., a nationwide employment-services and staffing company, said he had never seen companies this reticent to hire during his 26 years of working in the employment business.
It's normal for companies to turn to staffing companies for temporary employees when a recession ends. But after the past three recessions, Tuerff said companies hired in anticipation of getting orders for services and products when the recovery came. Now they're waiting until they receive the orders.
The employment-services business has been among the fastest-growing sectors in Arizona, with a 9 percent growth in jobs this year through August, or a growth of about 7,300 jobs, the Commerce Department said.
Tuerff said another reason for that growth was that many firms shrank their human-resource departments and turned to outside firms even to get skilled workers, such as high-tech employees.
Ironically, while Arizona is losing jobs for the third year in a row and its 9.7 percent unemployment rate is at a 27-year high, there are thousands of job openings. CareerBuilder.com, for example, listed about 7,300 jobs in Arizona on Thursday.
Companies are having a tough time matching employees to the skills they need, Tuerff said.
"This is a global challenge, a real challenge, a real difficulty," he said. "Jobs are remaining open for a long period of time."
"Imagine how much we could help the economy if we could reduce the time it takes to fill those open jobs. And a lot of them pay really well."
