The Phoenix-Mesa-Chandler metro area has an overall grade of C+ with a composite score ranking it 45.8th percentile out of 50 US metros. This city's economic character is most defined by its above-average labor demand, with a composite score of 6.49 ranking it in the 78th percentile, and its below-average labor force growth, which is contracting at a rate of -2.95% year-over-year. The labor demand metrics, including employment growth and weekly hours, signal a genuine demand expansion.

Labor Demand

The Phoenix-Mesa-Chandler metro area has an employment growth rate of +0.96% year-over-year and a weekly hours deviation of +0.843% from its own trend, indicating a genuine demand expansion. This combination signals that the city is adding jobs and workers are putting in more hours, suggesting a strong labor market. The labor demand composite score of 6.49 ranks in the 78th percentile, further supporting the notion of a thriving labor market.

Unemployment

The unemployment rate in Phoenix-Mesa-Chandler is 4.20%, ranking it in the 36th percentile, indicating a market with some slack. This means that businesses may find it relatively easier to hire workers, but may also face less wage pressure. However, the unemployment rate is not extremely low, suggesting that there is still a pool of available workers.

Wage Growth

The year-over-year wage growth in Phoenix-Mesa-Chandler is +3.22%, ranking it in the 32nd percentile, indicating moderate wage growth. This means that employer labor costs are rising, but not extremely quickly, and worker purchasing power is increasing, but not at a rapid pace. The moderate wage growth suggests a relatively stable labor cost environment.

Cost of Living

The cost of living in Phoenix-Mesa-Chandler is near the median, with a percentile rank of 53, and a price-to-salary ratio of $264/sqft to $37.74/hr, or 7.00. The fact that the PSF is falling by -2.2% year-over-year suggests that the city is becoming more affordable. This means that businesses may be able to attract talent without needing to offer significant wage premiums, giving them a talent attraction advantage.

Labor Force Growth

The labor force in Phoenix-Mesa-Chandler is contracting at a rate of -2.95% year-over-year, ranking it in the 2nd percentile. This means that the supply of workers is shrinking, which could create a structural headwind for hiring. Businesses may need to be more competitive in their hiring practices or consider alternative locations with growing labor pools.

Building Permits

The number of building permits in Phoenix-Mesa-Chandler is falling by -7.52% year-over-year, ranking it in the 38th percentile. This suggests that the housing supply is tightening, which could lead to decreased affordability and make it more difficult for workers to relocate to the area. This trend signals a potential risk to future workforce accommodation and affordability.

Days on Market

The median days on market in Phoenix-Mesa-Chandler is 59 days, with a year-over-year change of +0.0%, ranking it in the 30th percentile. This means that homes are selling relatively quickly, making it a competitive market for relocating workers. However, the stable days on market suggests that the market is not extremely hot, and workers may still be able to find suitable housing.

Office Economy

The office economy in Phoenix-Mesa-Chandler is deep, with a professional worker share ranking it in the 80th percentile. This suggests that the city has a strong talent pool suited for tech, finance, consulting, and HQ decisions. However, the city may be less suited for industrial or logistics-dominant businesses, which may require a different type of workforce.

The Phoenix-Mesa-Chandler metro area offers businesses a strong labor market with above-average labor demand, but also presents a significant risk due to its contracting labor force. The single biggest constraint for decision-makers to factor in is the shrinking labor pool, which could create challenges for hiring and workforce growth. Despite this, the city's relatively affordable cost of living and deep office economy make it an attractive location for businesses in certain sectors.