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Arizona Unemployment Rate Up For Third Month In Row, But Economists Aren't Panicking

Arizona's jobless rate is up for the third month in a row.

But the economist whose job is to report the numbers insists there's nothing to see here.

Doug Walls, research administrator for the state Department of Administration, does not dispute the seasonally adjusted unemployment rate for June is 5.8 percent. That's up two tenths of a point over the prior month and four tenths of a point over where it was in March.

These unemployment numbers are based on a household survey, Walls said, asking people whether they are employed and, if not, if they're looking for work. He instead prefers to focus on a separate survey of businesses which asks them how many people they had on the payroll last month.

On one hand, that report shows the state lost 39,700 jobs between May and June. Most of the losses were in local education, with the state counting public school employees who are not on contract as unemployed when school is out.

Private sector employment gained just 100 jobs. Still, that's better than most June reports when private firms normally shed workers. Plus, the number of people working in the private sector is up by 83,000 since June 2015. Walls said that 3.8 percent growth rate is double the national average.

Thursday's report  drew essentially the same response from the governor's office as it did from Walls: Pay no attention to the numbers.

Spokesman Daniel Ruiz said, "Governor Ducey has been clear from day one that when it comes to our economy and employment, his focus is on continuous improvement. And that's what we're seeing across the board— movement in the right direction.''

Ruiz cited "Chief Executive Magazine" naming Arizona the sixth best state in the country to do business and Kiplinger ranking Arizona second in the U.S. for job growth.

The brightest spot in Thursday's report continues to be the state's healthcare sector.

Fueled by an aging population, health care employment was the lone sector of Arizona's economy that never really took a dive during the recession. In the last year alone, it added 12,300 workers.

Meanwhile, employment in professional and business services is up by 16,800 workers from a year ago. That includes 5,400 people in employment services, mainly temporary help.

The household survey, however, paints a somewhat different picture. It shows that the total workforce— the number of people working or looking for work— went up between May and June by 6,100.

That number includes not just people moving into the state but also new graduates looking for work. It may also reflect those who had dropped out of the workforce previously, perhaps because they stopped looking, but are back again on the job hunt.

But the jobs are not there: The report shows total employment in June down by 17,000, even as the number of people who say they're looking for work but can't find it is up by 23,100.

Economist Dennis Hoffman of the W.P. Carey School of Business at Arizona State University said he's not terribly concerned about month-over-month changes in employment. Hoffman pointed to strong year-over-year job growth, particularly the 3.8 percent increase in private sector employment. But he said he's waiting for some sign that wages are also growing, at least to match inflation.

Hoffman also said there are areas of the economy that are of concern, citing the continued weakness in retail employment growth which makes up about one out of every eight jobs in the state.

Hoffman said that's not a surprise and predicts more of the same. "Shoppers are just shopping in very different ways,'' Hoffman said. "They don't need to go to department stores with the frequency that they [once] did,'' he said.

That's due in large part to online shopping— "You can now just order it online and try it out,'' Hoffman said. "And if you don't like it, return it locally,'' essentially making the brick-and-mortar stores into return centers.

Government employment, which makes up an even bigger segment of the Arizona economy, also showed a big month-over-month drop.

Hoffman said much of that is due largely to summer break in schools. But he said there is some question of how many of those jobs will be there in the fall, even with voter approval of Proposition 123.

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Kathy Ritchie has 20 years of experience reporting and writing stories for national and local media outlets — nearly a decade of it has been spent in public media.