Zions Bank Small Business Index for Idaho
March 2010 Release
April 7, 2010

Written by Jeff Thredgold, President, Thredgold Economic Associates
Economic Consultant to Zions Bank

SOLID U.S. JOB GAINS A POSITIVE SIGN FOR IDAHO'S SMALL BUSINESS SECTOR

HIGHLIGHTS

• The Zions Bank Small Business Index for Idaho registered 95.4 in March 2010, up from a revised 94.0 in February

• Idaho’s unemployment rate was estimated at 9.4% in the most recent month, down slightly from the 9.5% rate of the prior month.  Idaho employment fell by an estimated 18,400 jobs during the past 12 months

• The strongest U.S. job gain in three years is one more sign of renewed U.S. economic growth, ultimately a positive development for Idaho’s small businesses

• The U.S. economy gained an estimated 162,000 net new jobs in March, slightly less than the 190,000 gain expected.  However, job gains of the two prior months were revised higher.  The U.S. unemployment rate remained at 9.7% in March

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JOBS TRANSITION

The American economy saw a net rise of 162,000 jobs during March, the strongest monthly gain in three years.  The reported gain was slightly below expectations of a rise of 190,000 jobs.  However, job data of the two prior months was revised to show 62,000 additional jobs.

Following revision, the U.S. economy has added jobs during three of the past five months.  Consensus forecasts hold expectations of hundreds of thousands of new jobs to be reported over the next few months. 

Yes…more than one-half million of the jobs to be reported in coming months will be temporary Census jobs.  Yes, when these jobs are completed in 4-6 months, they will detract from employment totals then.  However, the majority of jobs being created in the economy will be permanent jobs, providing meaningful income gains to tens of thousands of American families. 

Powerful Swing
The U.S. economy added an average of 54,000 jobs monthly during 2010’s first quarter.  While not impressive versus traditional employment gains, the 54,000 average rise is worlds apart from the 753,000 average monthly loss during 2009’s first quarter.

As expected, the nation’s unemployment (jobless) rate remained at 9.7% in March, matching the rate of the two prior months.  It is still feasible that the rate could actually move slightly higher in coming months—despite solid job gains—as hundreds of thousands of people reenter the labor force in search of more plentiful jobs.

Where the Jobs Are
Of the 162,000 net new jobs reported for March, 48,000 were tied to the Census.  With modest declines in other government employment sectors, 123,000 net new jobs were added in the private sector, the largest gain since May 2007.  Some economists had feared that most, if not all, of the expected March gain would be temporary Census jobs.

Job gains in March were spread across the economy.  An estimated 60% of industries added jobs in March, the highest share in four years (CNNMoney.com).

The goods-producing component of the economy added 41,000 net new jobs during March, the first gain in three years.  The long-suffering construction sector added 15,000 jobs during the month, the first gain since the summer of 2007.  Manufacturing added another 17,000 jobs, the third consecutive monthly gain, cementing the notion that the nation’s manufacturing sector has helped lead the way toward U.S. economic recovery.

The nation’s much larger service-providing sector added 82,000 jobs last month, with gains in wholesale and retail trade, transportation, professional & business services, leisure & hospitality, and education & health services.  Job gains in the health care sector since the recession started in December 2007 now total 588,000, with 27,000 net new jobs in March.

Pain Continues
Despite the more favorable nature of the March data, much in the way of employment pain and suffering still exists…

• The “underemployment rate”…the total of those officially counted as unemployed, those working part-time hours who would prefer to work full-time, and those discouraged workers who have left the labor force but would accept a job if one were offered, rose slightly to 16.9% from 16.8% in February

• A total of 15 million people are counted as unemployed, close to record levels

• Of the 15 million unemployed, a record 6.5 million, or 44% of the total, have been out of work for at least six months, a record high.  That figure rose by 414,000 last month alone

A Better Story
The job gains and losses reported above, and the primary focus of media coverage of the job market, comes from a monthly survey of roughly 375,000 businesses, known as the establishment survey.  The unemployment rate comes from a different survey, one conducted monthly of 60,000 households.  It has a disadvantage of a smaller sample size, but includes estimates of the self-employed and other workers who are excluded from the larger establishment survey.

The more encouraging employment story being told by the household survey is worth mention.  While the U.S. economy officially added 162,000 jobs during March, the household survey estimated a much stronger 264,000 rise. 

More importantly, while the establishment survey noted a net gain of an identical 162,000 jobs during the first quarter just ended, the household survey estimates that total employment jumped by 1.1 million jobs during the quarter.  Many economists would suggest that the household survey can be a better measure of job gains during transition periods from job contraction to job creation.

U.S. economic performance is a component of the Idaho Small Business Index.  Employment gains and losses are key factors relative to U.S. economic growth or recession.

IDAHO EMPLOYMENT

The Idaho unemployment rate—the most heavily weighted component of the Zions Bank Small Business Index for Idaho—was estimated at 9.4% in the most recent month, down from the 9.5% rate of the prior month.  The estimated 9.4% rate compares to the 7.2% rate of one year ago.  A higher Idaho unemployment rate is a positive for the Index as it implies greater labor availability for Idaho’s small businesses.

The Idaho jobless rate averaged 8.0% in 2009, 4.9% in 2008, 3.0% in both 2006 and 2007, and 3.7% in 2005.  By comparison, the Idaho jobless rate averaged 4.9% between 2000 and 2004, and 5.5% during the 1990 to 1999 period.

The latest 12-month decline in Idaho employment estimated at 18,400 jobs (down 3.0%) compares to a revised loss of 21,300 jobs in the prior year-over-year period.  Idaho lost 38,900 jobs in 2009, lost 6,100 jobs during 2008, added an average of 22,300 jobs annually during 2005 to 2007, and gained an average of 7,100 jobs annually during the 2001-2004 period. 

These totals compare to gains averaging 17,600 net new jobs annually during the 1991-2000 period.  More recently, employment declines, leading to slower income creation and softer retail spending, have a negative impact upon Idaho’s small businesses…and therefore, the Index.

 

 

The April 2010 Zions Bank Small Business Index for Idaho will be released on May 12, 2010.

Jeff Thredgold
Thredgold Economic Associates
Economic Consultant to Zions Bank
(801)614-0403

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