Arizona’s economy is growing, but at a sluggish pace, according to a new report from the Common Sense Institute (CSI) Arizona. Senior economist Zachary Milne described the state’s current economic footing as “middle of the pack,” with job growth and wage increases slowing from earlier highs seen in previous years.
CSI’s September economic outlook showed that Arizona’s unemployment rate ticked up slightly from 4.1% to 4.2%, placing it 34th nationally, tied with New York. South Dakota posted the lowest jobless rate in the country, while California and Washington, D.C. remained at the bottom of the list.
The state added just 2,200 jobs from August to September, ranking Arizona 21st in the country for job growth during that period. While job additions were modest, some sectors saw modest gains. Professional and business services added 2,000 jobs, while manufacturing saw a loss of 200 jobs.
Year-over-year, Arizona gained 32,600 jobs—an increase of 1.01%, slightly above the national growth rate of 0.83%. However, this still lags behind the state’s pre-pandemic performance. Milne noted that Arizona’s economy is “underperforming” compared to earlier years and warned that the coming months are likely to bring more of the same.
From September 2024 to September 2025, the mining and logging industry led growth with an 8.8% increase, followed by education and health services at 4.1%. The latter represents a significant portion of Arizona’s non-farm employment, about 17%, while trade, transportation, and utilities remain the largest sector at 19%, despite experiencing a slight 0.1% decline over the year.
Among metro areas, Tucson edged out Phoenix with the strongest economic growth in the state, posting a 0.5% increase. Private-sector wages also rose, with the average hourly wage increasing from $33.96 to $35.17 over the past year.
While job numbers remain subject to revisions, Milne pointed out that Arizona has seen relatively stable corrections, unlike many other states facing downward adjustments.
