Experts:
August 21, 2026
Arizona added 2,300 non-farm jobs on a seasonally adjusted basis in July (+0.07%), ranking 20th among all states and Washington D.C. The U.S. lost 23,000 jobs in July (-0.01%). Although job growth at the U.S. level had been positive, July marks the first month of job losses since February. In total, 24 states reported job losses MOM in July.
On a year-over-year (YOY) basis, Arizona added 23,100 jobs (+0.71%) and ranked 12th best out of all states and Washington D.C. This statewide growth exceeded the national gain of 0.20% YOY in July. In total, 15 states reported job losses YOY in June.
Arizona’s manufacturing sector gained an estimated 500 jobs in July (+0.26%, 19th best out of all states), breaking a previous three-months long streak of losses. On a YOY basis the state lost 600 manufacturing jobs (-0.31%) – one of 28 states reporting losses to this sector since July 2025 and ranking 27th overall. After accounting for July’s gains, manufacturing employment is unchanged from the close of 2025. The U.S. saw a slight increase in manufacturing employment in July (+5,000 jobs, +0.04%), but steep declines through the second half of 2025 brought the YOY comparison to a negative 14,000 jobs (-0.11%).
The unemployment rate in Arizona settled at its post-pandemic high of 4.9% after increasing for two consecutive months. The unemployment rate in the state has increased 5 out of the 7 months for which we have data in 2026. Today, Arizona has the 8th highest unemployment rate among the 50 states and D.C. Arizona’s labor force participation rate (60.1%) saw its sixth consecutive month of decline and is 2.0 percentage points below where it was at this time last year. The unemployment rate for the United States overall, however, fell for the second time since January, down to 4.1%.
Key Findings – Arizona July 2026 Employment Data (BLS CES Survey)
Arizona continues to see slow employment growth, rising unemployment, and a decline in its labor participation rate. As we have discussed in previous reports, the combination of these three factors suggests Arizona’s labor market may be continuing to weaken from the post-pandemic highs of a few years ago, but the increased volatility in economic data following the pandemic along with changes in national policy surrounding factors like immigration make it difficult to interpret labor market signals.
Slow growth in the labor market may be partly due to slowing population growth and a decline in immigration, while declines in labor force participation, at least at the national level, appear to be due to a combination of older, retirement age workers leaving the workforce, and a reduction in the participation of prime-aged workers from recent highs to levels more on par with 2019. Arizona, unlike the U.S., has seen its unemployment rate rise consistently over the last year, but even at the current rate of 4.9% the state is generally in line with the unemployment rates seen during 2017-2019 – a period when Arizona saw some of the strongest job gains in the country.
Sector Winners and Losers
Seven sectors saw job gains in July, with the additions in Professional and Business Services (+1,300 jobs, +0.28%) and Education and Health Services (+1,600 jobs, +0.28%) accounting for more than half of the gross employment gains in the month. Both sectors have seen strong growth at the state and national levels since late 2025, and in Arizona specifically they have accounted for the vast majority of YOY job gains in the state as well. Since July of 2025, these two sectors have posted a combined gain of 30,600 jobs in the state compared to the YOY total non-farm gain of 23,100. Arizona’s Information (+0.61% MOM) and Trade, Transportation and Utilities (+0.14% MOM) sectors continued to grow as well both on a MOM and YOY basis in July.
Arizona’s Leisure and Hospitality sector continued its downward trend in the month of July, losing 1,600 jobs MOM (-0.44%), and posting a cumulative loss of 7,900 since July of 2025 – the largest YOY decline this sector has faced since 2021. Interestingly, the state’s Mining and Logging and Construction sectors saw job losses in July as well (-1.75% and -0.57%, respectively), although both have been on a steady, positive trajectory since at least October of 2025, and show strong growth over the last 12 months. While the Financial Activities added jobs in July (+0.25%), this sector has been on a steady downward trajectory, shedding 1.85% of its jobs since this time in 2025.
We continue to caution that these figures are subject to change as the BLS revises its previous employment estimates.
Wages
Arizona wages rose slightly in July, as average hourly earnings (not seasonally adjusted) grew by $0.07 (+0.20%, 32nd out of all states and D.C.). On a YOY basis, wages increased $1.13 (+3.25%), ranking 20th out of all states and Washington D.C.
Because state-level wage data is not seasonally adjusted by the BLS, seasonal variation can lead to significant volatility in the monthly figures. For context, the seasonally adjusted U.S. hourly wage increased +$0.02 in July (+0.05% MOM). Compared to this time last year, American wages are growing at a rate of 3.15%.
- Arizona private sector workers are now earning an average of $35.95/hour, compared to $34.82/hour a year ago (+3.25%).
- Nationally, the average worker earned $37.62/hour in July (+3.15% YOY)
As of the latest inflation and wage data for June, real wages are up approximately 0.2% YOY in the state (June 2025 to June 2026), while real wage growth has decreased (-0.1%) at the national level.
