By Ethan Faverino |

New data from the Common Sense Institute’s Arizona Jobs and Labor Force Update shows Arizona added 5,100 non-farm jobs on a seasonally adjusted basis in January, representing a modest 0.16% increase from December. This gain ranked the state 25th highest among all 50 states and Washington, D.C. Nationally, the U.S. economy added 160,000 jobs in January, with 44 states reporting month-over-month job gains.

However, on a year-over-year basis, Arizona’s labor market weakened significantly. The state lost 15,000 jobs compared to January 2025, marking a stark contrast to the national gain of +0.20%. Arizona ranked 43rd in year-over-year job growth, one of 24 states experiencing annual job losses. This marked the 22nd consecutive month of annual job growth below 2% in Arizona.

Revised data now indicate the state has been experiencing year-over-year job losses since August 2025—the first negative annual reading since September 2024 and the largest percentage decline since March 2021.

Arizona’s manufacturing sector provided a bright spot in January, adding approximately 600 jobs. The state was one of only 20 to add manufacturing jobs that month. However, on an annual basis, manufacturing employment continued to contract, down 0.7% from January 2025, with Arizona among 40 states losing manufacturing jobs over the year.

Unemployment in Arizona edged up slightly to 4.5% in January from a revised 4.4% in December, giving the state the 35th highest unemployment rate nationally. The state’s labor force participation rate held steady at 62%. Nationally, the unemployment rate declined modestly to 4.3% in January and has remained at that level through March 2026.

Sector performance in January varied. The “Other Services” sector led growth, adding 1,300 jobs (+1.3%), though it remains one of Arizona’s smaller supersectors with just 105,000 workers. Construction added 800 jobs month-over-month.

On an annual basis, the Mining and Logging sector continued to outperform, expanding 7.2% since January 2025. Meanwhile, the state’s largest supersector—Trade, Transportation, and Utilities—added only 200 jobs in January. The Information sector posted the weakest annual performance, declining 1.83% year-over-year.

While employment growth has slowed, wage growth in Arizona remained robust at the start of 2026. Average hourly wages rose $0.47 in January, ranking the state 9th nationally for monthly wage growth. Over the past year, Arizona’s average hourly wage increased by $1.10, placing it 29th in the U.S. for annual wage growth. Private Sector workers in Arizona now earn an average of $35.32 per hour, up from $34.22 a year ago.

Nationally, average hourly wages rose 0.35% in January and have continued growing, with the U.S. rate reaching 3.5% year-over-year as of March. Real (inflation-adjusted) wages in Arizona were up 1.2% as of January. Roughly in line with national trends, though they remain down 3.4% since April 2020.

Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.