PHOENIX — It certainly won’t match the boom years of the last decade.
Aruna Murthy, director of economic analysis, said Thursday that several things are driving her prediction of a 2.5 percent year-over-year increase in employment. One is anticipated strong growth in the number of people working at doctors’ offices, hospitals and emergency care centers.
"Arizona’s population is growing, even if it’s growing at a slower rate,” she said.
"A lot of the baby boomer generation are getting old,” Murthy continued. "They will all need health services.”
Murthy also forecasts higher employment by hotels, bars and restaurants. She figures that an improving economy nationwide will lead to more tourism.
What also will help, Murthy said, are lower home mortgage interest rates.
"People have taken advantage of refinancing, thereby bringing down their monthly payment,” she explained. What that ultimately means, she said, is "more money to spend for other goods and services.”
And Murthy said there’s a sort of feedback effect of job growth that also will boost consumer spending and, by extension, retail trade employment.
"Essentially, with people gaining jobs, they have more money to spend,” she said. "And that’s being reflected in the economy to a certain extent.”
Her forecast also envisions a 5.9 percent growth in the number of jobs in the state’s beleaguered construction industry. But Murthy said there is less there than meets the eye.
She pointed out that the state has lost more than half the 247,500 jobs it had in construction when the industry hit its peak in June 2006. So even a small numerical jump — in this case, an additional 7,000 jobs — means a big percentage hike.
But even by the end of 2013 total construction employment will still be at just 124,800.
Not all sectors of the economy are expected to improve.
Murthy said that employment at private universities and trade schools is likely to decline. Aside from the recent crackdown by the federal government on student loans to some of these institutions, Murthy said it’s a matter of simple economics: People go back to school when unemployment is high to get new jobs skills. And they drop school when they are employed again.
Murthy cautioned, however, there are a variety of outside forces that could turn her forecast inside out. That starts with the European debt crisis.
"Countries in the Euro Monetary Zone are an important market for U.S. exports,” she said. And she said Europe remains a source of foreign investment for domestic financial markets.
There also is the slowing economic growth in China as that country finds lower demands for its exports. That, in turn, reduces the ability of the Chinese to buy U.S. products.
But Murthy said Arizona is somewhat insulated from problems there, as exports to China amount to just 1.15 percent of the state’s gross domestic product.
Murthy also said one big unknown is corporate spending.
On one hand, she said, big companies are showing an increase in their profits.
"However, there’s still uncertainty in the business environment,” Murthy said.
"We are not seeing as much of an investment from the corporate end as we would like,” she continued. "They’re still holding profits.”
Murthy said the hope is that companies will finally become confident enough that the economy is really on the mend and start spending some of that money on new equipment which, in turn, should drive up manufacturing employment.
If there is one sour note of sorts in the forecast, it is the anemic job growth predicted for Pima County. While the Tucson area amounts to about 15 percent of the total state population, Murthy figures that total employment next year will add just 3,600 jobs — or just 6 percent of the state’s total.
Murthy said several factors are at work.
One is the loss of spring training teams. That, in turn, hits hard at hotels, bars and restaurants.
She also said there is little need for new construction jobs, as the area’s slow population growth is not yet enough to offset high vacancy rates in commercial real estate as well as an oversupply of homes.