Lackluster hiring by private companies last month left the state's seasonally adjusted jobless rate for December unchanged at 8.7 percent.
The Department of Administration reported Thursday that overall employment in Arizona dropped by 3,000 between November and December. Aruna Murthy, the agency's director of economic analysis, said that number was driven down by the loss of 7,100 jobs in the public sector last month.
Murthy said, though, this is not significant, as the loss involves people working in public schools, community colleges and universities. She said when those schools are not in session on the day when the rate is calculated, those who are not getting paychecks -- often support staff -- are technically counted as unemployed even though they go back to work in January.
The bigger concern is that the state added just 4,100 new private sector jobs in December. That is less than half of the 10-year average of 8,800 for this time of the year.
Thursday's report comes as members of the state's Finance Advisory Committee said they believe Arizona's economy will continue to improve, but not as fast as some might have hoped.
Economist Elliott Pollack cited figures showing that from 1950 through 2006 the state ranked second or third in employment growth. But all that changed with the recession, with Arizona particularly hard hit: By 2010 the state was losing more jobs, on a percentage basis, than anywhere but Nevada.
So far this year, Pollack said, the state's job growth is 24th in the nation.
He compared it to someone who had been in intensive care.
"The patient is out of intensive care, but he's not running any marathons,'' Pollack explained.
"He's using a walker,'' he continued, with slow recovery. "But just because you're recovering doesn't mean you're healthy again.''
"Although we are seeing gains in Arizona, the gains are not that strong to move the (unemployment) needle sufficiently down,'' she said. Murthy said that is not surprising.
"You have to keep this in mind that this recession the volume of people who have lost jobs is way, way higher than any of the past recessions,'' Murthy continued. "It's going to take time for us to gain all those jobs back.''
Economist Dan Anderson of the Arizona Board of Regents cautioned that those counting on population growth to boost the economy are missing a key point.
"People come to Arizona not because they come but because there are jobs here,'' he said.
"It's the jobs that attract them,'' Anderson said. "Until the job engine gets going I don't think we're going to see much in the way of population increases.''
Of note in the monthly jobless report is that retail trade employment remained flat between November and December. But Murthy said there are some possible explanations for that.
"Even before Halloween started, things were out for Christmas,'' she said. "People were being hired and trained to handle the big Christmas season that everybody was expecting.''
What that means, Murthy said, is the stores had pretty much brought on everyone they needed before December and did not need to hire anyone else last month.
She said, though, that some last-minute help may have been brought on through temporary employment services. And the number of people working in that sector last month jumped by 2,200.
Still, Murthy said the news is not really bad.
"The thing you have to keep in mind is where we were last year,'' she said. The number of people working last month is 37,500 higher than the same time a year earlier.
More to the point, Murthy said that retail employment in December 2010 was actually lower than a year earlier. Now, she said, the year-over-year growth is 5,600.
"So, that speaks to something,'' she said. "That speaks that we are moving in the right direction.''
Elsewhere in the economy, employment at bars and restaurants continued to increase, adding 1,600 jobs last month.
"It looks like people are beginning to spend,'' Murthy said.
"It's a holiday season, it's a celebratory occasion,'' she continued. "So people do go out and eat and spent.''
The trend, however, is more than seasonal: There are 6,800 more people working in this sector now than a year earlier.
But a different picture is emerging in the lodging industry which should be strong this time of the year. Total hotel and motel employment is down by 500 between November and December; even compared with last year, employment is 400 below that level.