Zions Bank Small Business Index for Utah
November 2009 Release
December 8, 2009
Written by Jeff Thredgold, President, Thredgold Economic Associates
Economic Consultant to Zions Bank
THE RETURN OF GLOBAL ECONOMIC GROWTH IS A POSITIVE SIGN FOR UTAH'S SMALL BUSINESSES
HIGHLIGHTS
- The Zions Bank Small Business Index for Utah was 79.3 in November 2009, up significantly from a revised 75.5 in October 2009
- Utahfs unemployment rate was estimated at 6.5% in the latest month, up from the 6.2% rate of the prior month. Total Utah employment fell an estimated 40,900 jobs during the past 12 months
- The return of global economic growth, following the first global recession since just after WWII, will pay dividends for Utahfs small business sector
- The U.S. economy lost an estimated 11,000 net jobs in November, much less than the 125,000 decline expected. In addition, job losses in September and October were revised to show 159,000 fewer positions eliminated. The U.S. unemployment rate declined
to 10.0% in November, down from a 26-year high of 10.2% in October
GLOBAL ECONOMIC GROWTH RETURNS
The consensus view of forecasting economists at mid-year 2009 was that the global economy, at that time in its first overall recession since just after WWII, would not likely emerge from recession until perhaps 2010fs second quarter. Like most forecasts,
that view was wrong. The global economy has already begun to grow again. Here is a quick peek at four other major global players who have joined the U.S. in economic recovery.
The Japanese economy plunged at nearly a 14% annual rate during the six months ending in March 2009, tied to major weakness in the global economy and a severe decline in Japanese exports to the world. However, the economy staged a rebound during the two
subsequent quarters, led in part by massive government stimulus. Japanfs 4.8% annual growth rate during the third quarter exceeded expectations.
Chinese economic growth picked up speed in recent months, following a sharp slowing late last year and during 2009fs first quarter. A powerful 9.0% growth pace seems likely during 2010, again leading the worldfs major players. China felt less impact from
the global downturn of the past year than did other major economies. A solid recovery in manufacturing output and exports is now in place.
India joined China and Indonesia as the only Asian economies to escape severe recession during the past year
(Reuters). Most forecasters see India growing roughly 7.0% in 2010, followed by slightly stronger performance in 2011, in part based upon expectations for a wetter monsoon season.
The most painful European recession since WWII is over. A modest 1.5% annual economic growth pace returned in the third quarter for the 16 nations who use the euro currency. As with its counterparts around the globe, a revival from serious recession was
fueled in part by rising exports and major stimulus programs across various European nations. While European economic growth has returned, its fragile and limited nature will keep consumer spending at modest levels.
Utahfs current economic recession cannot conclude without a prior return of U.S. economic growth, as well as a return of global growth. Both preconditions are now being met. Global economic performance is a component of the Utah Small Business Index, with
stronger performance a positive contributor to the Index.
UTAH EMPLOYMENT
The Utah unemployment rate—the most heavily weighted component of the Zions Bank Small Business Index for Utah—was estimated at 6.5% in the latest month, up from 6.2% during the prior month. The 6.5% rate compares to a 3.5% rate during the same month one
year ago. A higher Utah unemployment rate is a positive contributor
to the Index as it implies increased access to Utah labor.
Utahfs unemployment rate averaged 3.4% during 2008, 2.7% in 2007, 3.0% in 2006, 4.1% in 2005, and 4.9% during the 2000-2004 period. These rates compare to an average Utah unemployment rate of 3.5% between 1995 and 1999.
Total Utah employment fell by an estimated 40,900 jobs (down 3.3%) over the past 12 months. This decrease compares to a revised loss of 50,900 jobs in the prior year-over-year period. Utah added 1,900 jobs in 2008, 49,600 jobs in 2007, 55,700 jobs in 2006,
43,700 jobs in 2005, and 30,200 jobs in 2004.
These totals compare to gains averaging 38,000 new jobs annually during the 1994-2000 period and a net loss of 1,300 jobs in 2001 through 2003. More recently, job losses, leading to lesser income creation and softer retail spending, have
a negative impact upon Utahfs small businessescand therefore, the Index.
The Zions Bank Small Business Index for Utah was 79.3 during November 2009, up from a revised 75.5 during October 2009.
The Index measures business conditions from the viewpoint of the Utah small business owner or manager.
A higher Index number is associated with more favorable business conditions for Utahfs small businesses. The Index uses 100.0 for calendar year 1997 as its base year. The Index includes revisions to various historical and new forecast components as they
become available.
LOCAL PERFORMANCE
Cache County employment decreased by 2,200 jobs (-4.3%) in the latest 12-month period. The areafs jobless rate was 4.5%, up from the 2.6% rate of one year ago.
Weber County experienced a decrease of 5,300 jobs (-5.5%) from a year ago. Joblessness registered 7.4%, up from the 4.3% unemployment rate one year ago.
Davis County payrolls declined by 3,100 jobs (-3.0%) in the past year. The unemployment rate was 6.0% in the latest month, up from 3.4% one year ago.
Salt Lake County employment fell by 21,600 jobs (-3.6%) over the year. The countyfs unemployment rate was 6.5% in the latest month, up from 3.5% last year.
Utah County employment declined by 6,800 jobs (-3.6%) over the last 12 months. The areafs jobless rate was 6.1%, up from the 3.3% rate of one year ago.
Washington County payrolls declined by 2,400 jobs (-4.6%) in the past year. The unemployment rate was 8.6% in the latest month, up from 5.2% one year ago.
NATIONAL EMPLOYMENT
The U.S. Department of Labor reported a net loss of 11,000 jobs in November 2009, the 23rd monthly decline in a row, but sharply below the estimated loss near 125,000 jobs. In addition, previously reported job losses during
September and October were revised to show the net loss of 159,000 fewer jobs. The
U.S. economy has now lost 7.2 million jobs since the 'Great Recession' began in December 2007.
The U.S. unemployment rate declined to 10.0% in November, versus a 26-year high of 10.2% in October. The current 10.0% jobless rate compares to the 6.8% rate of one year ago and is more than double the 4.7% rate of November 2007. The average hourly wage
rose 0.1% (one cent) to $18.74 hourly, a rise of 2.2% during the past 12 months.
Goods-producing employment continued to decline in November, with a net loss of 69,000 jobs. Manufacturing employment fell by 41,000 positions, while construction lost another 27,000 jobs.
Service-providing employment rose in November by 58,000 positions. The professional & business services sector gained 86,000 jobs, while the retail trade sector lost 15,000 jobs in November. Government employment rose by 7,000 jobs, while the education
& health services sector added 40,000 positions in November.
The net decline of 3.1 million jobs during 2008 was the worst year since 1945. The loss of 4.1 million jobs during 2009's first 11 months has already surpassed the 2008 total. The net decline of 7.2 million jobs is a painful contrast to the average gain
of 1.9 million net new jobs annually during 2005 to 2007. Modest job gains and losses could be reported in coming months as the U.S. economy continues to emerge from the worst recession in the post-Depression period.
The December 2009 Zions Bank Small Business Index for Utah will be released on January 12, 2010.
Jeff Thredgold
Thredgold Economic Associates
Economic Consultant to Zions Bank
(801)614-0403
©Copyright 2009 Thredgold Economic Associates
