Report shows Arizona added jobs, ranking third in the nation despite economic slowdown

Arizona’s labor market remained relatively strong during the first quarter of 2026, adding 15,500 jobs, according to a new economic report.

The findings come from Rounds Consulting Group’s spring 2026 Arizona Economic Update, which ranked Arizona as third in the nation for total nonfarm job growth among all 50 states. The report was made for the Arizona Office of Economic Opportunity.

Economist Jim Rounds, who leads the consulting firm, said much of the state’s recent job growth has come from the healthcare sector.

“We’ve been seeing the most job growth in healthcare across the country and then in Arizona, but that’s probably a trend that’s not going to continue. It’s going to be one of the stronger areas right now,” Rounds told KTAR News 92.3 FM’s Arizona’s Morning News on Thursday.

Government job growth slows as private sector gains

Rounds said private sector hiring has helped offset slower growth in government jobs. However, he warned that healthcare may not remain as strong in the long term.

“Remember, we still have that big issue towards the end of the decade where we’re going to have to resolve whether or not the federal government’s going to be kicking a lot of the Medicaid costs down to the states,” Rounds said. “That’s going to impact a lot of what happens on our healthcare industry, so they’re already preparing for a lot of potential changes.”

The state also ranked No. 3 for job growth in the information industry, reflecting Arizona’s growing tech economy. Computer equipment is now the state’s top international export, according to technology publisher Visual Capitalist.

Private education also saw a boost in jobs

Both private education and health services saw a 2.2% increase, with more than 11,800 jobs added in both sectors, according to the Rounds Consulting report.

The educational growth pertains to services and other workforce training activities, Rounds said.

“We have a lot of the high-tech businesses still coming here,” he explained. “These people have to be trained. These people still require a lot of equipment and a lot of general training so that they can get those jobs at TSMC and the other places.”

The slowest job growth is in government and construction. Rounds said the broader economic slowdown has led to less building activity and less movement of goods and services.

Rounds also said Arizona’s unemployment rate can be slightly higher than the national average because it is a fast-growing state. As more people move to Arizona and look for jobs, they are counted as unemployed until they find work.

“When you’re looking for work, you get counted. When you’re not looking for work, you don’t,” Rounds explained. “When you have more economic activity, surprisingly, you end up having maybe two or three tenths of a percent higher unemployment rate. So, it’s kind of a weird phenomenon, but it makes sense when you think about it.”

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