Phoenix labor growth expands as housing permits face headwinds

Article originally posted on AZ Big Media on August 25, 2025

Phoenix has seen labor growth expand so far in 2025, while job growth and housing permits face headwinds, according to an analysis from the Eller Business Research Center.

Exhibit 1 presents current Phoenix-Mesa-Chandler MSA economic indicators.

In June, the non-seasonally adjusted civilian labor force within the Phoenix-Mesa-Chandler MSA (Phoenix MSA) grew by a notable 1.8% compared to the previous year, reaching a total of 2.8 million individuals. This increase builds on solid spring momentum, with April and May recording gains of 1.0% and 1.5%, respectively, reflecting a gradually strengthening labor force in the region.

The Phoenix MSA’s labor market showed decent strength in June, as non-seasonally adjusted resident employment climbed 1.3% year-over-year, reaching 2.7 million. While April and May recorded weaker gains of 0.4% and 0.7% respectively, June’s improvement suggests growing momentum in regional employment. At the state level, Arizona showed consistent year-over-year increases in the second quarter of 2025, with employment rising 1.3% to 3,647,697.

With labor force growth outpacing job gains, the Phoenix MSA’s labor market showed signs of slack in June, as the non-seasonally adjusted unemployment rate rose 0.5 percentage points over the year to 4.0%. April and May showed similar patterns, with unemployment rates rising 0.5 and 0.8 percentage points year-over-year to 3.1% and 3.7%, respectively.

Seasonally adjusted nonfarm employment in the Phoenix MSA declined by 0.2% in June, with total jobs falling by approximately 5,000 to 2.5 million. The June figure marked the second consecutive monthly decline, following a 0.3% contraction in May. In contrast, the first four months of the year, January through April, saw zero or positive job growth.

Non-seasonally adjusted nonfarm employment in the Phoenix MSA rose 0.4% over the year in June, reaching 2.4 million jobs. This rise follows year-over-year gains of 0.5% in April and 0.6% in May. Among major industry sectors, Mining and Logging posted the largest percentage increase, rising 5.4% to 3,900 jobs. Notable growth also occurred in Government (up 1.7%) and Other Services (up 1.4%). On the other hand, the Information sector experienced the steepest decline, falling 6.3% to 38,500 jobs. Additional losses were recorded in Manufacturing (-1.9%), Professional and Business Services (-1.3%), Construction (-1.2%), Trade, Transportation, & Utilities (-0.5%), and Financial Activities (-0.1%).

Non-seasonally adjusted average hourly earnings in the Phoenix MSA have steadily increased throughout 2025, rising 6.0% year-over-year in June to $36.51. March recorded the strongest annual growth thus far, with an 8.2% increase bringing average hourly earnings to $36.39. At June’s rate, full-time annual earnings translate to approximately $75,940.

Retail sales excluding food and gasoline rose 4.0% over the year in May, reaching $6.5 million. Restaurant and bar taxable sales showed comparable growth, increasing 5.2% to $1.5 million. In contrast, sales in the Gasoline and Hotel/ Motel categories declined by 14.7% and 1.6%, respectively, with totals falling to $587,500 and $242,700. Amusements posted the strongest percentage year-over-year gain, climbing 10.4% to $170,400.

In June, non-seasonally adjusted housing permits in the Phoenix MSA declined over the year for both total and single-family units. Total permits dropped 16.8% to 3,290, while single-family permits fell 7.3% to 2,071. May showed slightly stronger overall activity, with total permits rising 8.4% to 3,968; however, single-family permits continued to lag, down 17.1% over the year to 2,072.

Total housing units sold in the Phoenix MSA rose 5.0% over the year in June, reaching 6,636 units. Both average sale price and total transaction volume posted gains. The average home price edged up 0.2% to $593,000, while total housing sales climbed 5.2% year-over-year to $3.9 billion.