2025 Economic Trends in Phoenix: Health Care Sector Growth, Rising Wages
The Phoenix labor market remains the strongest in Arizona, with nonfarm employment (at a 1.2% increase) slightly outpacing national employment growth (1.0%). This and other insights were shared at the 2025 Phoenix Economic Forum, presented by Western Alliance Bank and sponsored by Snell & Wilmer and the Phoenix Business Journal.
High interest rates continue to put pressure on real estate markets. But recent and upcoming Fed rate cuts could release pent-up demand, according to leading economist Dr. Christopher Thornberg of Beacon Economics, a provider of economic research, forecasting and industry analysis and data services, who spoke at the 2025 Phoenix Economic Forum.
Unemployment is up, but wages continue to rise
The Phoenix unemployment rate ticked up by a quarter of a percentage point between July 2024 and July 2025, but it remains below 4%, lower than the national average. However, Tucson, Flagstaff and non-metro regions saw sharper increases.
Wages in Phoenix continue to rise. In July 2025, average weekly earnings were 4.9% higher year-over-year, reaching $1,285, a payday that is $90 higher than the national median. With other metro areas facing stagnant earnings, Phoenix now leads the state in wage growth.
Health care, natural resources drive job growth; AI exerts pressure on information sector jobs
The health care industry added 19,500 new workers over the past year — nearly a third of all net new jobs. Already the city’s largest employer, health care is also its second fastest-growing industry, with a 5.7% expansion over the past year, outpaced only by the natural resources sector, which grew by 8.0%.
Rising demand for health care services reflects a national trend. But Phoenix has seen particularly robust growth, in part due to Mayo Clinic’s $1.9 billion investment in its Scottsdale campus, alongside major investments by other industry players. A loss of over 1,000 jobs in the information sector mirrors a national trend and may indicate the disruptive impact of AI.
High interest rates put pressure on real estate markets
Phoenix’s residential real estate market is under pressure from high borrowing costs, weakening a market with limited demand. Prices have fallen, and housing supply has increased, but overall sales remain close to recent record lows.
In the rental market, deliveries continue to outstrip demand, leading to high vacancy rates. Office real estate also faces elevated vacancy rates and low rents.
Overall outlook: Phoenix’s strengths
Phoenix faces some economic pressures, many of which reflect national trends — particularly in both residential and office real estate.
But with strong employment and income numbers as well as population growth, Phoenix’s economy continues to outperform other metro areas in the region. Among the fastest-growing in residential and commercial markets, its real estate market may get a boost from future Federal Reserve rate cuts.
With rising wages, job growth in select sectors and a great quality of life, Phoenix is well-positioned to weather current conditions for a prosperous cycle in the coming years.
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