According to the most recent figures from the Arizona Department of Economic Security, Cochise County lost 525 non-farm jobs from June to July. Comparisons to July last year show a 12 month job growth rate of -0.4 percent. Since the beginning of the year, the 12 month job growth rate has fallen steadily. July is the second consecutive month of negative 12 month job growth.

The decline in job growth is largely the result of a slowdown in construction throughout most of the county. Another contributor has been higher interest rates, which discourage borrowing and raise the cost of previously incurred variable-rate debt, resulting in lower levels of consumption and investment spending in the economy. When less money is spent, fewer jobs are created.

The county's private sector lost 250 jobs in July. The 12 month job growth rate was 0.6 percent. Within the private sector, goods-producing jobs - which include manufacturing along with mining and construction - declined by 50 in July. In the 12-months ending in July, mining and construction saw job growth of -2.7 percent, reflecting the loss of 75 jobs, mostly in construction. Manufacturing jobs stabilized in July, for a 12 month job growth rate of 8.8 percent.

The private service-providing sector lost 200 jobs from June to July, bringing the 12 month job growth rate to 0.7 percent. Within this sector, the industry groupings of trade, transportation, and utilities; and leisure and hospitality, each lost 100 jobs, for 12 month job growth rates of 1.5 and -0.6 percent, respectively. Professional and business services lost 50 jobs in July, bringing the 12 month job growth rate to 3.7 percent. Educational and health services, and financial activities each gained 25 jobs, bringing the 12 month job growth rate in these industry groupings to 1.9 and -7.1 percent, respectively. Other services and information each stabilized at July levels. Twelve-month job growth rates in these industries were -7.3 and -5.6 percent, respectively, showing significant job losses

The government sector in Cochise County saw a net decrease of 275 jobs from June to July. This reflects a loss of 350 state and local government jobs and a gain of 75 federal government jobs. In the 12 months ending in July, government jobs declined by 300, which reflects the loss of 200 federal government jobs, for job growth of -4.0 percent, and a loss of 100 state and local government jobs, for a 12 month job growth rate of -1.5 percent.

Cochise County's unemployment rate increased from a seasonally adjusted rate of 3.8 percent in June to 4 percent in July. Despite the steady decline in job growth in the first half of the year, the county's unemployment rate continued to drop through June. July marked the first month the county's unemployment rate had increased since January. Despite this, the county's unemployment rate in July remained six-tenths of a percentage point below the rate in July 2006, and still within the range considered by most economists to represent full employment.

According to DES estimates, adjusted for seasonality by the Cochise College Center for Economic Research, city level unemployment rates for July were: Benson, 7.2 percent; Bisbee, 4.5 percent; Douglas, 6.2 percent; Huachuca City, 5.9 percent; Sierra Vista, 2.4 percent; Tombstone, 2.7 percent; and Willcox, 6.1 percent.

It is important to note that DES employment data for cities in Cochise County are based on a model that allocates employment and unemployment based on data collected during Census 2000. This model does not pick up changes at the city level that differ substantially from county-level trends. CER focus group discussions in various areas of the county indicate a likely overestimation of unemployment in Benson, Douglas, and Willcox, which have reported labor shortages and, as a result, rising wages. It is likely that the unemployment rate in Sierra Vista is higher than estimated by DES; probably closer to a full-employment unemployment rate of between 3 and 4 percent. Thus, decreased unemployment in Benson, Douglas, and Willcox are likely attributed to Sierra Vista in the DES figures, due to modeling errors.

We should expect a continued slowing of job growth throughout the remainder of the year. The hardest hit industries will continue to be construction, financial activities, information, and other services. The future direction of the Federal Reserve with respect to interest rates will impact employment at the local level.

Uncertainty over inflation, and modest gains in productivity at the national level, suggest current rates will hold steady in the second half of 2007. The Fed's recent drop in the less-important discount rate signals the Fed's concern over slowed productivity, particularly regarding the nation's struggling real estate market. However, with inflation remaining a concern to many economists, it is unlikely the Fed will favor lowering its target for the federal funds rate, a primary driver of interest rates throughout the economy.

If you have any questions on the economy, please contact the CER at (520) 515-5486 or email the center at cer@cochise.edu. Be sure to check out the CER's website at www.cochise.edu/cer.