The Phoenix-Mesa-Chandler metro area has an overall grade of B- with a composite score ranking it at the 44.1th percentile out of 50 US metros. This city's economic character is most defined by its strong labor demand, with an 82nd percentile ranking, and its below-average unemployment rate of 4.10%, which ranks at the 29th percentile. The labor demand composite score of 5.84, driven by a +0.96% employment growth rate and +0.193% weekly hours deviation, signals genuine demand expansion.
Labor Demand
The employment growth rate of +0.96% and weekly hours deviation of +0.193% indicate a strong labor market with genuine demand expansion. This combination signals that the city is adding jobs and workers are putting in more hours, suggesting a healthy and growing economy. The labor demand composite score of 5.84 reinforces this assessment, ranking at the 82nd percentile.
Unemployment
The unemployment rate of 4.10% is below the national average, ranking at the 29th percentile, indicating a relatively tight labor market. This means that businesses may face challenges in finding and hiring qualified workers, and may need to offer competitive wages to attract talent. The tight labor market also suggests that workers may have more bargaining power.
Wage Growth
The year-over-year wage growth rate of +2.55% is moderate, ranking at the 32nd percentile. This rate suggests that labor costs for employers are rising, but not excessively so. Workers in the area can expect to see some increase in their purchasing power, but it may not be enough to keep pace with cost of living increases.
Cost of Living
With a cost of living ratio of 7.22, based on $269/sqft and $37.26/hr, Phoenix-Mesa-Chandler ranks at the 48th percentile in terms of affordability. This means that the city is relatively affordable compared to its peers, which could be a talent attraction advantage. The fact that PSF is falling by 1.8% YoY also contributes to the city's affordability.
Labor Force Growth
The civilian labor force is contracting at a rate of -1.31% year-over-year, ranking at the 22nd percentile. This decline in labor force supply suggests that businesses may face structural headwinds in hiring and expanding their workforce. The shrinking labor pool may limit the city's ability to support rapid business growth.
Building Permits
The year-over-year change in building permits is -29.08%, ranking at the 6th percentile, indicating a sharp decline in housing supply. This suggests that the city may be facing a future affordability crisis, which could impact its ability to attract and retain workers. The decline in building permits is a concern for businesses that rely on a steady supply of skilled workers.
Days on Market
The current median days on market is 64 days, with a year-over-year decline of -1.5%. This suggests that the housing market is relatively competitive, but not extremely so. Workers relocating to the city may still find it accessible, but the market is not as slow as it could be.
Office Economy
With an office/professional worker share of 3.30, ranking at the 76th percentile, Phoenix-Mesa-Chandler has a deep talent pool suited for tech, finance, and consulting businesses. The city's strong office economy makes it an attractive location for businesses that require specialized knowledge workers, but it may be less suitable for industrial or logistics-dominant businesses.
The Phoenix-Mesa-Chandler metro area offers businesses a strong labor market with genuine demand expansion, but the single biggest risk or constraint is the declining labor force supply and sharp decline in building permits, which could lead to future affordability and workforce accommodation challenges. Despite these challenges, the city's relatively affordable cost of living and deep professional talent pool make it an attractive location for certain types of businesses. However, decision-makers should carefully consider the potential risks and constraints when evaluating this city as a potential location.