Government And Health Care Losses Add To State’S Unemployment Woes

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PHOENIX — Arizona’s unemployment rate hit 7 percent in January as government and health care — sectors that had been bright spots in the shaky economy — shed jobs along with retail and construction, the state Department of Commerce announced Thursday.

The rate is the highest the state has seen since 1993, and Dennis Doby, the department’s senior director of research administration, expects it to continue rising through late this year.

“From these numbers, it doesn’t seem like we’ve seen bottom yet,” Doby said.

With school districts and state and local governments grappling with tight finances, the government sector lost 12,600 jobs in January. Local education accounted for 7,200 of those losses.

The educational and health services sector lost 3,600 jobs.

January typically sees a decline in employment as the holiday season wraps up, but this year’s figures were far worse than normal: 74,400 jobs lost during the month compared to a 10-year average of 46,800.

While rising from 6.6 percent in January, Arizona’s unemployment rate was still below the national rate of 7.6 percent.

Employment fell by 155,400 jobs since January 2008, the largest year-over-year decline since the department began recording data in 1939.

Marshall Vest, an economist at the University of Arizona’s Eller College of Management, said the worst is yet to come.

“The economy is in a freefall and it has been since the end of last year,” Vest said. “We’ve just begun to see some significant layoffs, but there’ll be more layoffs at the end of this year.”

None of the sectors tracked by the Commerce Department reported job gains in January.

Retail took the hardest hit, showing a net loss of 13,000 jobs. Department store job losses accounted for 4,100 of that total.

Vest said consumers are stunned by what’s going on in the economy and are holding off on spending.

“Until that fear goes away, we won’t see much of an upturn,” Vest said. “And it’s a good time for real bargains; it’s a good time to start shopping.”

Goods-producing industries lost 12,700 jobs, including 9,800 in construction and 2,300 in manufacturing. January marked the 17th consecutive month of declines in construction, which shed 47,600 jobs from January 2008 to January 2009. The professional and business services sector lost 16,400 jobs, 8,700 of them in employment services.

Leisure and hospitality lost 4,500 jobs, while financial activities dropped 2,600, with most of the losses in real estate, rental and leasing.

Tim James, an economist at Arizona State University’s W.P. Carey School of Business, said the good news is that the rate of job losses will begin to slow sometime in the middle of this year.

“When there are signs that the rate of increase goes down, it means that the economy has hit the bottom,” James said. “It means the absolute worst is over.”

Vest, from the UA, said it could be as long as 2012 before the economy regains momentum.

“We’re at the worst right now, but thank goodness recessions don’t last forever,” he said.

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