Is the economic tide turning in Prescott? New data paints a worrying picture: Prescott's labor market appears to be cooling down, and a shrinking workforce could mean trouble for the region's future prosperity. Let's dive into the details, based on a recent analysis by the Economic and Business Research Center (EBRC) – Arizona's leading source for economic insights since 1949 (https://www.azeconomy.org/).
The Prescott Metropolitan Statistical Area (MSA) saw its seasonally adjusted civilian labor force hover around 106,966 in August, essentially unchanged from the previous month. While there's been a slight rebound since May, after a dip from 107,062 in April to 106,855, the bigger picture reveals a concerning trend. And this is the part most people miss: Compared to last year, the labor force is down a significant 3.0% year-to-date. This suggests that people are leaving the workforce faster than they're entering it.
Resident employment, also seasonally adjusted, took a slight dip to 102,648 in August, down 49 from July. But here's where it gets controversial... While a small monthly change might seem insignificant, employment has been trending downwards throughout 2024, declining from 106,673 in December 2024 to around 103,000 in recent months. Could this be a sign of businesses struggling to retain employees, or are other factors, like early retirement, at play? Overall, resident employment for the first eight months of the year is 3.6% lower than the same period last year – a clear indication of a weakening job market.
Adding to the concerns, seasonally adjusted unemployment in the Prescott MSA increased by 55 (1.2%) in August, reaching 4,318. Nearly every month this year has witnessed an increase in unemployment, rising from 3,851 in January to the current year-to-date high. Year-to-date, resident unemployment has surged by 13.6% compared to last year. For context, the statewide unemployment trend mirrors this, rising from 146,714 in January to 157,143 in August, a 7.1% increase. This could be due to layoffs across the state or people re-entering the job market.
The seasonally adjusted unemployment rate for the Prescott MSA remained steady at 4.0% in August. However, it's crucial to note that this rate has been gradually creeping up throughout 2024, rising from 3.6% in January. Arizona's statewide unemployment rate shows a similar pattern, starting at 3.9% in January and February before settling at 4.1% from March through August. While these numbers might seem small, they signal a steady increase in joblessness.
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On a brighter note, non-seasonally adjusted hourly earnings in the Prescott MSA saw a positive jump of 4.5% in August, increasing by $1.20 year-over-year to $27.67. June and July also experienced similar wage growth. August's rate translates to roughly $57,553 annually for a full-time worker. This wage growth could be a response to the shrinking workforce, with employers offering higher pay to attract and retain talent. But here's where it gets controversial...Are these wage increases enough to offset the rising cost of living in Prescott? Are they truly benefiting workers, or are they simply keeping pace with inflation?
Seasonally adjusted total nonfarm employment in the Prescott MSA reached 71,600 in August, a modest increase of 200 (0.3%) from July. Employment has been relatively stable in recent months, fluctuating slightly from 72,000 in April to 71,400 in July before the August gain. Arizona's statewide employment exhibited similar volatility. This indicates that the job market is neither booming nor collapsing, but rather experiencing a period of uncertainty.
However, looking at non-seasonally adjusted total nonfarm employment, the Prescott MSA experienced a 0.4% year-over-year decrease to 71,300 in August. Most months in 2024 have shown year-over-year declines, with July being the exception, posting a 0.9% gain to 70,100. This reinforces the idea that the overall trend is downward, despite occasional positive blips.
In terms of industry performance, Other Services led the way with a 3.8% year-over-year increase in August, reaching 2,700 jobs. Private Education and Health Services (+2.3%), State and Local Government (+2.1%), and Professional and Business Services (+1.4%) also saw notable growth. These sectors seem to be more resilient in the current economic climate.
Unfortunately, not all sectors are thriving. Manufacturing experienced the most significant year-over-year decline, dropping 5.6% to 3,400 jobs in August, followed by Trade, Transportation, and Utilities (-3.7%). Other sectors with declines include Leisure and Hospitality (-2.0%) and Mining, Logging, and Construction (-1.4%). These declines could be indicative of changing consumer spending habits or broader economic challenges facing these industries.
Non-seasonally adjusted retail sales excluding food and gasoline in the Prescott MSA saw a 3.4% year-over-year increase in August, reaching $258.6 million. June and July showed similar growth. This suggests that consumer spending remains relatively strong, despite the concerns in the labor market.
Finally, non-seasonally adjusted housing permits in the Prescott MSA have been highly volatile in recent months. Total permits surged 147.4% year-over-year in June, but then reversed course in July and August. This volatility makes it difficult to predict the future of the housing market in Prescott. Are these fluctuations simply seasonal, or do they reflect deeper economic uncertainties?
So, what does all this mean for Prescott? The data suggests a cooling labor market, with a shrinking workforce and rising unemployment. While some sectors are showing growth, others are struggling. It's a mixed bag of signals, and the future remains uncertain. What are your thoughts on these trends? Do you agree with this assessment? What factors do you believe are contributing to these changes, and what actions should be taken to address them? Share your opinions in the comments below!
