The Prescott labor market is showing signs of cooling, a trend primarily driven by a shrinking workforce. Let's break down what's happening in Arizona's economic landscape, based on an analysis by the Economic and Business Research Center, a trusted source for economic insights since 1949.
In August, the seasonally adjusted civilian labor force in the Prescott Metropolitan Statistical Area (MSA) held relatively steady at 106,966. While there was a slight recovery after a dip in May, the labor force is still 3.0% smaller than it was last year. Think of it like this: fewer people are actively seeking jobs in the area.
Resident employment, also seasonally adjusted, dipped to 102,648 in August, a decrease of 49 from July. This downward trend has been consistent throughout 2024, with employment falling from approximately 106,673 in December 2023. Consequently, resident employment for the first eight months of the year is 3.6% lower compared to the same period last year. This suggests that fewer people are employed in the Prescott area.
Unemployment, however, is on the rise. Seasonally adjusted unemployment in the Prescott MSA increased by 55 (or 1.2%) in August, reaching 4,318. This increase is part of a larger trend of rising unemployment throughout the year, climbing from 3,851 in January. Year-to-date, resident unemployment has surged by 13.6% compared to last year. At the state level, Arizona is experiencing a similar increase, with unemployment rising by 7.1% from January to August.
But here's where it gets interesting: the unemployment rate in the Prescott MSA remained stable at 4.0% in August. This rate has gradually increased throughout 2024, starting at 3.6% in January. Arizona's statewide unemployment rate followed a similar pattern, beginning at 3.9% and then rising to 4.1%, where it has remained since March. This means that while the number of unemployed people is increasing, the percentage of the workforce that is unemployed has remained relatively constant.
Now, let's talk about wages. Non-seasonally adjusted hourly earnings in the Prescott MSA saw a solid increase of 4.5% in August, rising by $1.20 year-over-year to $27.67. This wage growth is equivalent to an annual salary of approximately $57,553 for a full-time worker. This is a positive sign for the local economy, as wages are increasing.
Total nonfarm employment in the Prescott MSA reached 71,600 in August, up 200 (or 0.3%) from July. Employment has been relatively flat in recent months. However, non-seasonally adjusted total nonfarm employment fell 0.4% year-over-year to 71,300 in August. This means that while there was a slight increase in August, overall employment is still slightly lower than last year.
Looking at specific industries, Other Services showed the strongest year-over-year growth in August, increasing by 3.8%. Private Education and Health Services (+2.3%), State and Local Government (+2.1%), and Professional and Business Services (+1.4%) also saw notable growth. On the other hand, Manufacturing experienced the largest year-over-year decline, falling 5.6%, followed by Trade, Transportation, and Utilities (-3.7%). This highlights shifts in the local economy.
Retail sales (excluding food and gasoline) in the Prescott MSA rose by 3.4% year-over-year in August, reaching $258.6 million. This indicates that consumers are still spending, which is a positive sign for the local economy.
Finally, let's examine housing permits. These have fluctuated significantly in recent months. Total permits surged by 147.4% year-over-year in June, but then declined in July and August. This volatility could indicate changes in the housing market.
Controversy & Comment Hooks: What do you think these trends mean for the future of Prescott's economy? Are the wage increases enough to offset the rising unemployment? Share your thoughts in the comments below!
