Construction to See Slowing Employment Growth Through 2027

Article originally posted on AZ Builders Exchange on March 11, 2026

The Arizona Office of Economic Opportunity has released its Arizona 2025-2027 Projected Employment Report, and the Construction sector falls toward the middle of the pack with an annualized percentage change of 0.3%.

Overall job growth across sectors is set at an estimated 0.7% annually from Q2 2025 to Q2 2027.

In its sector summary, the report says, “Construction is expected to add 1,296 jobs (0.3% annually) from 228,097 in Q2 2025 to 229,393 in Q2 2027. Continued in-migration and infrastructure development will support job growth, though the notably slower pace of expansion reflects a moderation in building permit activity and evolving conditions in the residential housing market.”

Presentation materials accompanying the report show building permits peaked in 2004/2005 and plummeted in 2007 at the start of the Great Recession. They then steadily increased between 2010 and 2022. Since 2023, permits have fallen again, experiencing a brief rebound in late 2023 before resuming their decline.

The materials state 4,301 building permits were authorized in October 2025, a 15.3% decrease from October 2024.

The number of jobs in Construction’s historical and projected job growth breaks down as follows:

  • Q3 2024: 228,102,
  • Q4 2024: 230,039,
  • Q1 2025: 228,405,
  • Q2 2025: 228,097 and
  • Q2 2027: 229,393.

Details were not provided for the 2026 intermediate period.

Overall Arizona Job Growth

Arizona employment is expected to increase to 3,541,061 jobs in Q2 2027 from 3,495,282 jobs in Q2 2025. This represents an increase of 45,779 jobs, or 0.7% annualized growth.

Ten of Arizona’s 12 industry sectors are expected to see growth over the projection period. Educational Services is expected to lose 3,336 jobs (0.7% annually), and Information should fall by 724 jobs (also 0.7% annually).

The sectors expected to see annualized percentage growth are:

  • Health Care and Social Assistance: 2.6%,
  • Leisure and Hospitality: 0.7%,
  • Trade, Transportation and Utilities: 0.6%,
  • Manufacturing: 0.5%,
  • Construction: 0.3%,
  • Government: 0.2%,
  • Financial Activities: 0.2%,
  • Other Services: 0.1%,
  • Natural Resources and Mining: 0.1% and
  • Professional and Business Services: 0.1%.

It should be noted the study areas of Yuma, Flagstaff, Prescott, Lake Havasu City-Kingman and Sierra Vista-Douglas combine Construction and Natural Resources and Mining jobs in reporting their monthly job sector totals. The report materials state, “Natural Resources and Mining employment had an average annual loss of 0.5% in the five years prior to the pandemic (Q1 2015 – Q1 2020).” The expected 0.1% growth rate equates to 120 jobs.

The overall projected job growth, while slower than in recent years, is expected to span the entire state. “All Arizona counties are projected to gain jobs over the two-year projected period. Greenlee County (1.8% annualized growth) and Pinal County (1.2% annualized growth) are projected to record the largest job growth rates,” the report says. “Maricopa County (36,284 jobs) and Pima County (3,007 jobs) are projected to record the largest job gains. Maricopa County is projected to account for 79.2% of the jobs gained in the state over the two-year projected period, while Pima County is projected to account for 6.6%.”

Initial Assumptions vs Current Events

All predictive assessments start from a base set of assumptions as a foundation. AOEO listed the following assumptions as its starting point:

  • No major economic or political disruptions will occur during the projected period;
  • Global supply chains and public health conditions will remain stable without causing major economic interruptions;
  • Government agencies will operate within their budgets;
  • The distribution of Arizona’s population will not differ significantly from the distribution in the base year;
  • The U.S. economic framework will not differ significantly from the framework in the base year;
  • Long-term employment patterns will continue in most industries during the projected period;
  • Arizona’s population growth will continue to be among the fastest in the nation, and
  • Demand for healthcare services will increase as population demographics shift.

It is not known to what extent, if any, recent events like the U.S. Supreme Court ruling curtailing portions of the Trump administration’s tariff policies under the International Emergency Economic Powers Act of 1977 or the commencement of military operations against Iran will impact projections based on those assumptions.

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