Benchmark revisions and 2024 job data pull Arizona employment lower; March 2025 report shows third consecutive year‑over‑year decline

State and independent labor analysts on the FAC panel reported large downward revisions to Arizona employment for 2024 and continued job declines in early 2025, especially in professional and business services, transportation and parts of manufacturing.

University of Arizona economist George (University of Arizona economist) summarized the downward revisions: "Arizona's job growth decelerated significantly last year. What we thought, 2024 looked like was revised down significantly." He said Phoenix’s preliminary strong growth was revised closer to the national rate and Tucson’s slow growth was revised to job losses.

Doug Walls (labor market analyst, state labor office) explained the mechanics and magnitude of the revisions and data limits: "So annually, 2024 employment was revised down by 23,200 jobs," and he described how benchmark revisions rely on employer tax records and the Quarterly Census of Employment and Wages. Walls told the panel the monthly household and payroll surveys can miss turning points, are sensitive to survey response rates, and that the March 2025 monthly employment report showed total nonfarm employment down about 0.5% year‑over‑year (roughly 15,400 jobs). He said eight of 12 industry sectors posted losses and the unemployment rate rose to about 4.1 percent.

Panelists linked the sectoral losses to interest‑rate sensitivity and changing demand patterns: employment declines concentrated in professional and business services, retail and wholesale trade, transportation, construction and manufacturing. Panelists also flagged slower residential and commercial construction permit activity, a rising rental vacancy rate, and weaker hiring and quit rates compared with the pandemic period as corroborating indicators.

What was recommended: analysts said the revisions and fresh monthly data justify conservative near‑term revenue assumptions for the state and reinforced the JLBC‑FAC recommendation to consider the two‑sector forecast rather than the January baseline until additional corroborating data arrive.

The panel agreed further revisions are possible as benchmark processes complete and urged caution in treating short‑term data swings as persistent trends.