Ted Simons: Good evening. Welcome to "Arizona Horizon." I'm Ted Simons. Arizona's jobless rate went up by three tenths of a percent in August. It's now at 8.3%, a full percentage point above the national rate. Here to help explain is Dan Anderson, an economist for the Arizona Board of Regents. Good to see you again.
Dan Anderson: Good to see you.
Ted Simons: 8.3 up from 8.0. Surprise?
Dan Anderson: Surprised a little bit. Because the increase in the unemployment is not because people are losing jobs. We actually created in the last year about 40,000, jobs. I think what's happening is that people are hearing the good news or the better news, I hate to characterizes as good, but the economy is getting better. Particularly at the national level maybe more quickly than here. People hear that and that encourages them to look for work. The people are unemployed because they don't have a job and are actively looking but I think it's a false signal. People are coming looking for jobs, it causes the unemployment rate to rise. They start to search for jobs. We see the same thing when the economy is getting bad. A lot of times when the economy is really bad we actually see the unemployment rate decline because people get so discouraged they quit looking for jobs so the rate falls, not because things are getting better but because people withdraw from the labor force. Now people are coming back into the force, looking for jobs, it causes the unemployment rate temporarily to rise.
Ted Simons: Is Arizona any different in that particular schematic? I mean, a full percentage point above the national rate, I thought we were having a comeback in Arizona.
Dan Anderson: We're having a comeback here, but Arizona is very dependent on migration. We have a lot of people that are moving to the state, a lot of mobility that’s important here. One of the most critical times to move is during the summer. Their children are out of school so they can relocate maybe individuals have graduated from school and have moved here looking for jobs. So we usually see a large influx of people into the population right around the end of the summer. This ties in with that in August.
Ted Simons: As you mentioned I think 40,000 nonfarm jobs over all. Biggest gains, government, education, health services. Any surprise there's?
Dan Anderson: Well, the government piece you have to understand is a comparison between July and August. The schools are starting up in August so it looks like a lot of people are unemployed in government, but compared to a years ago there are fewer people in the public sector today than months ago. It was just a seasonal influence there. The other sectors, health care has been a growing sector for months and months. That's not surprising. Over a 4% increase compared to a 2% increase for the economy as a whole.
Ted Simons: When we talk about how services -- I imagine once the affordable care act gets up and running who knows what happens to jobs?
Dan Anderson: It's hard to say but I think it's an area of continued growth for Arizona.
Ted Simons: Sounds like biggest loss, professional and business, manufacturing and construction. What are professional and business services?
Dan Anderson: Probably the biggest part of professional business services is the temporary help businesses. A lot of companies hire individuals maybe during the summer to take care of people going on vacation, maybe to cover an excess increase in business not sure if it's permanent or not. You bring staff on temporary. If the individuals pan out maybe they convert to permanent.
Ted Simons: Basically that number would drop because what, it might be a good thing that number drops because those people may be moving to permanent jobs.
Dan Anderson: Plus the fact some people on vacation return from vacation and those positions are now filled on a permanent basis.
Ted Simons: Manufacturing and construction also down. That's got to be a concern.
Dan Anderson: The area of concern to me is manufacturing. We really need a strong manufacturing sector. The construction piece is a seasonal piece. If you look at construction over the year it's up. But just between July and August it's down. May have been due to weather, may have been just due to timing of projects that got completed and people haven't moved to something else. We'll watch that in the months ahead. I think it will turn around. The long term one is manufacturing.
Ted Simons: sounds like the job gains hit a 10-year average, just nowhere near previous years when things were picking up again. It sounds in general this is a one-month snapshot.
Dan Anderson: I wouldn’t be too excited particularly in a very seasonal month like August when because of the heat and just a lot of other things you may not get an accurate view of what's going on. But we're still in that position that we have been in for many months which is the economy is recovering slowly. We're not booming as many people have seen maybe in previous cycles where we recover the jobs that we have lost in six or eight months. This has been years of recovery and I'm afraid we have years yet to go.
Ted Simons: Would you be surprised if next month the unemployment rate did not go back down a bit?
Dan Anderson: I would be surprised if within the next month or two that it didn't turn around. Month to month it's hard to say but after you have two or three months under your belt I would be really surprised if the rate doesn't start to move down toward the national average in the next month or two.
Ted Simons: We should be getting closer. This gap is one percentage point, the highest in two years.
Dan Anderson: That's a big difference. A lot of people are looking for jobs. It takes a while to interview and just go through that process. I expect that it will return to more reasonable relationship between the two shortly.
Ted Simons: Dan, good to have you.
Ted Simons: Thank you.