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State Jobless Rate Drops Slightly

The state's jobless rate dropped a tenth of a point last month. But Arizona Public Radio's Howard Fischer reports there are areas of concern.

On paper the state picked up 22,900 jobs over January to put the unemployment rate at 7.9%. But state economist Aruna Murthy said about 5,000 fewer people are employed in retail trade. "Stores are not able to sell as much and they are hiring fewer people to staff," Murthy said. "It's going across the board. So if it's a reflection of the economy. The economy hasn't taken off strongly. People are still worried. People are not spending as much as they typically do."

She said some of that uncertainty is the inability of the federal government to reach a deal over mandatory budget cuts. At the same time, there was a 2 percentage point increase in payroll taxes, meaning smaller paychecks. But Murthy said the problem could be more long term as shopping habits change. "A lot of the people shopped online," she said. "As a result, they didn't go to a retail store. So maybe retail stores may be reexamining how many people do we truly have to hire if a part of our sales are being compensated by online sales. The trend in the future, especially with younger generations, is a lot of them shop online."

Murthy also said that growth in health care employment, which has weathered the recession the best of any sector of the state economy, also has slowed.