New unemployment numbers released Thursday suggest the state's economic recovery is weakening.
The jobless rate for March stayed at 7.9 percent. But economist Aruna Murthy from the state Department of Administration said what's making her take notice is that the year-over-year growth in new jobs, which had hit 2.5 percent last June, has been sliding now for several months.
And now it's just 1.8 percent.
That, however, is only part of the issue. Murthy said retail trade employment grew at an anemic 0.2 percent -- just 500 jobs -- since the same time a year earlier.
In fact, if Arizonans were not out buying cars in force last month, forcing dealers and parts supplies firms to add staff, there would be fewer retail workers now than a year earlier.
Pulling down the numbers is weak employment in general merchandise retailers which includes department stores and warehouse membership clubs. Murthy pointed out there are 1,500 fewer Arizonans employed at these stores now than a year earlier.
The "why'' behind all of this, she said, is more complicated.
One factor, she said, is the increase in payroll taxes. Congress allowed a temporary 2 percentage point reduction to expire, meaning less in take-home pay.
Then there's the federal budget problems and the "sequestration'' of funds. While the cuts really have not yet occurred, just the possibility has made retailers and consumers a bit jumpy.
At the same time, she said, there is a pent-up demand for new wheels.
Murthy said that vehicle sales during the recession dropped by numbers not seen since World War II as motorists decided they could not afford such a major financial commitment and had to make do with their old jalopy. Now that the economy has improved -- and with many of these vehicles reaching the limit of their usefulness -- sales are booming.
That is showing up in figures from the state Department of Revenue. It reported sales at motor vehicle dealers in January at $531.6 million, a nearly 11 percent increase from the same time a year earlier.
And that, in turn, resulted in a 4.9 percent boost in the number of people working in that sector of the economy.
But here's the flip side: That rush to buy cars and trucks may be causing a drag on the rest of the retail economy. Murthy said when people invest in high-ticket items, even if they finance them, that can mean less disposable income for other items.
Vehicle sales aside, Murthy said the other bright spot in the state's employment situation is in the leisure and hospitality industry. That includes workers at restaurants and bars, where the number of people working is 7,900 higher than a year earlier, a 4.1 percent increase.
Murthy said much of that is likely due to the "snowbirds'' who winter in Arizona as well as tourism.