Phoenix MSA August 2026 Summary

Aug. 17, 2026

Niaoniao You, EBRC Senior Economic Forecaster

Employment

The non-seasonally adjusted civilian labor force in the Phoenix-Mesa-Chandler MSA (Maricopa and Pinal counties) has been on the decline since the start of 2026, consistent with the national trend. Demographic forces, including retirement of the baby boomer generation and low net migration, are likely behind this trend and are expected to continue putting downward pressure on the labor force. The labor force fell 3.1% over the year to 2.67 million; the decline from January to June was also 3.1%.

Non-seasonally adjusted resident employment based on household survey for the Phoenix MSA declined throughout the first half of 2026. The Phoenix MSA accounts for approximately 72% of the state’s total employment. In June, Phoenix employment fell 3.9% over the year to 2.54 million. From January to June, Phoenix lost 95,000 jobs, whereas the state as a whole lost 83,000 jobs.

The non-seasonally adjusted unemployment rate in the Phoenix MSA rose in recent months. After a dip to 3.8% in April, the rate climbed to 4.1% in May and jumped to 4.9% in June. Arizona’s non-seasonally adjusted unemployment rate increased by 0.9 percentage points to 5.5% in June. The small sample size of the Local Area Unemployment Statistics program made it too volatile to interpret in the short run. Seasonality also plays a part in the increase, but the seasonally adjusted unemployment rate at the state level also rose during the second quarter.

Seasonally adjusted total nonfarm jobs in the Phoenix MSA rose 0.1% over the year in June. Modest movements in payroll employment over the past few months held the level roughly the same as at the beginning of the year. Phoenix MSA accounts for around 75% of the state’s total seasonally adjusted jobs. Statewide, payroll employment was higher over the year in all three months of the second quarter.

Non-seasonally adjusted nonfarm employment in the Phoenix MSA jobs rose by 33,200, or 1.4% over the year in June, following year-over-year gains of 0.6% in April and 0.8% in May. Professional and Business Services, Other Services, Construction, and Trade, Transportation, and Utilities sectors led job gains, partially offset by losses in Financial Activities, Leisure and Hospitality, Manufacturing, and Government sectors.

Wage growth slowed in the second quarter, with non-seasonally adjusted average hourly earnings in the Phoenix MSA up 2.4% over the year in April–June compared to 3.7% in January–March. Earnings increased 2.4% in June to $37.4, translating to an average full-time earnings of roughly $77,792.

Spending

Retail sales excluding food and gasoline rose 2.8% over the year in May, reaching $6.67 billion. Gasoline sales jumped from March to June due to higher prices, rising 30.5% to $694.7 million in June. Hotel/Motel sales growth slowed to 7.2% in April and 7.8% in May, compared with double-digit rates over the year in the first quarter. Restaurants and Bars sales remained strong in April ($1.60 billion) and May (1.56 billion), rising 7.1% and 5.8% over the year, respectively. Amusements sales spiked in April with a 25.2% year-over-year increase, followed by a 14.2% decrease in May.

Housing

In June, non-seasonally adjusted housing permits in the Phoenix MSA rebounded after posting three consecutive year-over-year declines previously. Total permits increased 14.2% to 3,714, while single-family permits fell 2.6% to 1,993. Single-family permits stayed below year-ago level throughout the first half of 2026.

Based on data from Arizona Regional Multiple Listing Service, home sales in the Phoenix MSA continued to rise in the first seven months of 2026. The value of total housing sales increased by 10.7% over the year to $3.93 billion in July, with total units sold up 4.1% and average sale price rising 6.3% over the year to $609,000.

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