The Phoenix-Mesa-Chandler metro area has an overall grade of C+ with a composite score ranking it at the 40.0th percentile out of 50 US metros. This city's economic character is most defined by its labor demand composite score of 3.98, ranking near the median at the 44th percentile, and its labor force growth rate of -0.96% per year, placing it in the bottom tier at the 16th percentile. The combination of these metrics suggests a city with sluggish job market dynamics.

Labor Demand

The employment growth rate in Phoenix-Mesa-Chandler is -0.23% year-over-year, and weekly hours are deviating -0.241% from the city's own 12-month baseline, indicating a contraction in labor demand. This combination signals a lack of genuine demand expansion, as both job growth and hours worked are below trend. The labor demand composite score of 3.98 reflects this sluggishness, ranking near the median at the 44th percentile.

Unemployment

The unemployment rate in Phoenix-Mesa-Chandler is 4.00%, ranking below average at the 36th percentile. This suggests that the labor market has some slack, making it slightly easier for businesses to hire compared to tighter markets. However, the relatively high unemployment rate also implies weaker local consumer demand, which could impact businesses reliant on local spending.

Wage Growth

The year-over-year wage growth in Phoenix-Mesa-Chandler is +3.68%, ranking near the median at the 48th percentile. This moderate wage growth rate suggests that labor costs for employers are rising, but not excessively so. At the same time, workers in the area are experiencing a modest increase in purchasing power, which could support local economic activity.

Cost of Living

With a cost of living ratio of $272/sqft to $37.45/hr, resulting in a ratio of 7.26, Phoenix-Mesa-Chandler ranks near the median at the 47th percentile in terms of affordability. Given that the PSF is falling -1.8% year-over-year, the city is becoming more affordable relative to wages. This makes it more attractive for talent without necessitating significant wage premiums, potentially offering a competitive advantage in talent attraction.

Labor Force Growth

The civilian labor force in Phoenix-Mesa-Chandler is shrinking at a rate of -0.96% per year, placing it in the bottom tier at the 16th percentile. This contraction in labor force supply poses a structural headwind for hiring, as businesses may face challenges in finding qualified workers to fill open positions.

Building Permits

The number of residential building permits in Phoenix-Mesa-Chandler has decreased by -9.77% year-over-year, ranking below average at the 38th percentile. This decline suggests that housing supply is tightening, which could lead to future affordability issues and challenges in accommodating a growing workforce.

Days on Market

Homes in Phoenix-Mesa-Chandler are currently sitting on the market for a median of 57 days, with a year-over-year increase of +9.6%. This indicates a slowing market, making it slightly more accessible for relocating workers to find housing. However, the relatively moderate days on market suggests that the housing market is not overly competitive, striking a balance between accessibility and demand.

Office Economy

With an office/professional worker share composite score of 2.64, Phoenix-Mesa-Chandler has a near-median ranking at the 56th percentile, indicating a moderately deep talent pool in professional and office sectors. This makes the city more suited for businesses in tech, finance, consulting, or headquarters operations, but less ideal for industries requiring large industrial or logistics workforces.

The Phoenix-Mesa-Chandler metro area offers a business a moderately affordable cost of living and a labor market with some slack, but it is constrained by sluggish labor demand and a shrinking labor force. The single biggest risk or constraint for a decision-maker is the city's limited capacity for hiring due to its contracting labor force, which could hinder business growth and expansion plans.