(The Center Square) - Arizona ranked 12th among the 50 states for year-over-year job growth in July, according to a new report.
But the state is also seeing an unemployment rate higher than the national average and job losses in some industries, according to Common Sense Institute Arizona.
CSI released the report showing the state gained 23,100 jobs in July. This represents a 0.71% growth rate, which was more than triple the national rate of 0.2%.
July marked the fourth consecutive month of year-over-year job growth in Arizona.
Zach Milne, CSI’s director of policy and research, told The Center Square that July’s growth rate was similar to previous months.
The CSI report found there were more jobs in education and health services, professional and business services, and construction. Sectors that lost jobs were government, financial activities, and leisure and hospitality.
Doug Walls, the labor market information director for the Arizona Office of Economic Opportunity, said the private sector has been the source of the state’s year-over-year job growth.
A majority of Arizona’s sectors reported job growth year over year and month over month, Walls told The Center Square.
The report found Arizona gained 2,300 jobs from June to July, ranking 20th in America in month-to-month growth.
Arizona has seen more jobs in professional and business services and education and health services, Milne noted. He added that these industries have driven the state’s job creation, accounting for over half of the state’s employment gains.
Sectors that lost jobs month over month were leisure and hospitality, construction, and mining and logging, according to the report.
A majority of the job losses in the leisure and hospitality industry are “coming from food services, drinking places and hotels,” Walls said.
Leisure and hospitality jobs have been declining in Arizona, but not nationwide, Milne noted.
The report showed Arizona’s labor force participation rate declined for the sixth consecutive month. Currently 60.1% of the state's working age population is employed or actively seeking work. That's how the U.S. Bureau of Labor Statistics defines "labor force participation."
While it is hard to determine exactly why that rate keeps dropping, Milne said at the national level, people over age 55 are leaving the workforce, and America is seeing a decline in prime-age workers, ages 25 to 54.
The labor force participation rate for prime-age workers increased over the last few years but is starting to return to 2019 levels, Milne noted.
Walls said another reason for the labor force decrease is international migration, which in 2024 to 2025 fell 55% in the U.S. and around 50% in Arizona.
In addition, Arizona’s current unemployment rate is 4.9%, which is above the national rate of 4.1%. The state’s unemployment rate ranks ninth worst in the country, tied with Illinois and Michigan. The worst rate in the U.S. was Washington, D.C., with 5.9%, followed by Oregon and Connecticut both at 5.2%, and California at 5.1%.
Despite Arizona having one of the highest unemployment rates in America, the state's economy is showing many positive signs, Milne said. He added he expected to see a year-over-year job-growth near July’s rate through the rest of 2026.
