By Roland Murphy for AZBEX
Employment in the Arizona Construction sector continued to seesaw at the start of 2026, as the sector reported a decrease of 2,200 jobs in January, according to the latest report published by the Arizona Office of Economic Opportunity.
The state’s seasonally adjusted unemployment rate increased to 4.5%.
The national unemployment rate dropped to 4.3%, down from 4.4 in December. In January 2025, Arizona had a seasonally adjusted rate of 4.2%. The national rate was 4.0%.
Arizona had a not-seasonally adjusted decrease of 46,200 nonfarm employment jobs month-over-month. “Prior to the pandemic (2010-2019), NSA nonfarm employment lost 51,000 jobs on average in January,” the report states.
On a year-over-year basis, not-seasonally adjusted nonfarm employment fell by 19,400 jobs, a total of -0.6%. The seasonally adjusted total nonfarm employment rose by 5,100 month-over-month, a total of 0.2%.
The private sector lost 39,200 jobs, led by Trade, Transportation & Utilities, which fell by 18,200 jobs, and Professional and Business Services, which dropped 10,100.
Government employment fell by 7,000 jobs, most of which occurred in Local Government, which fell by 5,300.
The three sectors showing gains all had small increases. Private Educational Services rose by 200, while Natural Resources and Mining and Other Services both added 100.
Year-over-year, eight of the 12 sectors reported losses, led by a drop of 11,100 in Government. Construction was third with a loss of 3,900.
The sectors with year-over-year gains were led by Health Care and Social Assistance, adding 10,900 jobs.
Benchmarking
It is worth noting for this report that before January numbers are released, the U.S. Bureau of Labor Statistics’ Current Employment Statistics program revises/updates monthly historical employment estimates in a process referred to as benchmarking. Monthly estimates are revised using data from the Office of Economic Opportunity’s Quarterly Census of Employment and Wages, which gives a quarterly count of all employment in the country subject to unemployment insurance tax law.
According to the explanation in the report, “The replacement of CES estimates with adjusted data from the QCEW program is called benchmarking, and the new employment figures are often referred to as benchmarked data….
“During this benchmarking period, QCEW data were available through September 2025. Arizona and sub-state area CES employment estimates were revised using QCEW employment estimates from October 2023 through September 2025. CES employment estimates from October 2025 through December 2025, for which QCEW data were not available, have been recalculated using CES survey data and updated QCEW data through September 2025. In addition, small historical corrections were incorporated into the data from January 1990 to December 2025.”
For readers who follow our employment coverage closely, this benchmarking update should explain discrepancies between prior months’ data and the current reporting.
Construction Employment
Statewide construction employment totals 221,000 jobs, down from a revised total of 223,200 for December. In January 2025, the sector reported 224,900.
The Arizona Construction sector features three major segments: Construction of Buildings, Heavy and Civil Engineering Construction, and Specialty Trades Construction Contractors. There are currently 51,300 jobs in Buildings, which is up 700 from December and up 1,500 from January 2025. Heavy Construction was up 200 for the month at 27,100 and was up 700 for the year. Specialty Trades dropped 3,100 over the month for a total of 142,600, and the segment shed 6,100 year-over-year.
Construction jobs in the Phoenix Metro Area (Phoenix-Mesa-Scottsdale) decreased 2,000 over the month for a total of 176,500. The January 2025 number was 179,900. Metro Tucson lost 100 in January to hit 20,100, which is a loss of 800 year-over-year.
Yuma, Flagstaff, Prescott-Prescott Valley, Lake Havasu City-Kingman and Sierra Vista-Douglas combine Mining and Construction jobs in reporting their job sector totals. Yuma dropped 100 to 4,000. Flagstaff and Prescott-Prescott Valley also lost 100 jobs each, reaching 3,100 and 7,300, respectively. Lake Havasu City-Kingman was unchanged at 4,800, as was Sierra Vista-Douglas with 2,100.