By Roland Murphy and Rebekah Morris for AZBEX
The Arizona Construction employment sector is expected to grow to 200,434 jobs through Q2 of 2023, an annual rate of growth of 5.6%, according to projections released last week by the Arizona Office of Economic Opportunity.
Construction employment in January 2022 was reported to be 176,700.
Total projected employment in the state is expected to reach 3,375,515 jobs. The total job count in Q2 2021 was 3,109,190.
According to project presentation overview for the sector, “Construction employment is projected to grow by 20,776 jobs (5.6%) annually from 179,658 in Q2 2021 to 200,434 in Q2 2023. Job growth is expected to be driven by continued demand for residential housing, though planned interest rate increases may limit individuals from purchasing a home in the short term.”
While that projected growth is encouraging news for Arizona’s construction labor shortage, that will still leave the state with 39,866 fewer workers in the sector than were on the job during the 2006 peak.
Construction employment has been shown to be one of the three hurdles to increasing statewide construction activity. In the January BEX Construction Forecast Event, shortages in skilled labor, constraints in materials, and slowdowns in entitlements and permitting were presented as the reasons for slower than expected industry growth in 2021. Unfortunately, the labor shortage does not show any sign of easing despite sustained efforts by the industry to recruit, hire, train and retain workers. Demand far outpaces supply of construction services in the Arizona market.
All Other Sectors Also Grow
All 11 supersectors tracked by AOEO are projected to show growth. Particularly noteworthy sectors and data points include:
- A 6.7% annual growth rate for Leisure and Hospitality as tourism, domestic travel and consumer spending continue to increase;
- A 4.9% rate of job growth in Healthcare and Social Assistance, partially driven by the increasing number of Americans reaching the Medicare age of eligibility;
- An 8.3% growth rate in Transportation and Warehousing, a subsector of Trade, Transportation and Utilities, fueled by the ongoing shift in consumer purchasing habits, which was underway pre-pandemic but that exploded during COVID and shows no significant signs of abating.
All Arizona Counties Gain
All 15 Arizona counties also are expected to see employment growth. Maricopa County should see 4.4% annualized growth, but Coconino and Pinal counties are close behind at 4.3% and 4.1%, respectively. Maricopa County is expected to lead gains with an added 199,513 jobs; Pima will add 30,521, and Pinal will add 6,060.
Maricopa County is expected to make up 74.9% of all jobs in the state by Q2 2023. Pima County will be home to 11.5% of jobs.
Assumptions and Considerations
The Office of Economic Opportunity analysts made several assumptions and considerations when creating their estimates. Changes in any of the circumstances considered could lead to significant differences between the projected job numbers and the actual tallies.
Among the factors assumed and considered were:
- A lack of major political or economic disruption,
- A lack of additional major disruptions from the pandemic,
- An adherence to budgets by government agencies,
- No major shifts in Arizona population distributions,
- Consistency in the national economic framework,
- Most industries maintaining their current long-term employment pattern,
- Arizona continuing as a top five state for population growth, and
- An ongoing demographic-fueled increase in healthcare services demand.