PHOENIX, AZ--(Marketwired - Aug 14, 2014) -
- At less than one percent, foreclosure rate now among lowest in the nation
- Population growth firm at 1.3 percent year over year
- State spending growth remains steady
Although Arizona's economy has shifted into a lower gear in its economic recovery in part because of a slowdown in construction and real estate output, still-favorable fundamentals should support continued growth in the years ahead, according to the bi-annual U.S. State Monitor Report from BMO Economics. Real GDP growth is expected to improve to 2.4 percent this year, and gain further momentum to 3.5 percent in 2015.
The state has been a consistent job growth outperformer so far during the recovery, but has dipped below the national rate in recent months. Non-farm payrolls were up 1.5 percent year over year in Q2, the softest pace since mid-2011.
Tourism-related industries continue brisk hiring, while manufacturing has gained some momentum in recent months. As well, the unemployment rate continues to trend down, sitting at 6.9 percent in June versus 8.1 percent a year earlier. In particular there has been a boost in professional services and the tourism industry, which is great news for business owners in those sectors.
"The declining unemployment rate is encouraging news," said Tim Bruckner, Managing Director, Commercial Banking, Arizona, BMO Harris Bank. "What this report indicates, and what we're hearing from our customers across Arizona, is growing confidence in Arizona's economic recovery."
The unemployment rate decline does hide some underlying softness in the labor market, including year-over-year declines in average earnings and hours worked and significant underutilization with a large share of workers, 15.9 percent, looking for more hours.
The fast-paced housing market has slowed since the rate jump in mid-2013 and stricter lending rules took effect earlier this year. The good news is that the foreclosure rate has tumbled to below one percent (now among the lowest in America), while higher home prices have reduced the share of mortgages in a negative equity position. Although pace has slowed, fundamentals support a continued housing market recovery in the state. According to the S&P Case-Shiller Index, prices in Phoenix were up a solid 8.1 percent year over year in May.
"An improved economy is driving stronger population growth, which has picked up to a 1.3 percent year over year pace. That is still well below the 3.3 percent pace at the height of the housing boom, but well above the state median," said Robert Kavcic, Senior Economist, BMO Capital Markets.
State General Fund spending continues to rise at a solid clip, up 4.1 percent in fiscal 2014, while there are few major revenue measures.
To view a full copy of the report, visit www.bmocm.com/economics.
About BMO Harris Bank
BMO Harris Bank provides a broad range of personal banking products and solutions through more than 600 branches and approximately 1,300 ATMs in Illinois, Wisconsin, Indiana, Kansas, Missouri, Minnesota, Arizona and Florida. BMO Harris Bank's commercial banking team provides a combination of sector expertise, local knowledge and mid-market focus throughout the U.S. For more information about BMO Harris Bank, go to the company fact sheet. Banking products and services are provided by BMO Harris Bank N.A. and are subject to bank or credit approval. BMO Harris® and BMO Harris Bank® are trade names used by BMO Harris Bank N.A. Member FDIC. BMO Harris Bank is part of BMO Financial Group, a North American financial organization with approximately 1,600 branches, and CDN $582 billion in assets (as of April 30, 2014).