Zions Bank Small Business Index for Utah
March 2010 Release
April 6, 2010

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

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

HIGHLIGHTS

• The Zions Bank Small Business Index for Utah was 95.9 in March 2010, up from a revised 91.6 in February 2010

• Utah’s unemployment rate was estimated at 7.1% in the latest month, up from the revised 6.9% rate of the prior month.  Total Utah employment fell an estimated 27,700 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 Utah’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 Utah Small Business Index.  Employment gains and losses are key factors relative to U.S. economic growth or recession.

UTAH EMPLOYMENT

The Utah unemployment rate—the most heavily weighted component of the Zions Bank Small Business Index for Utah—was estimated at 7.1% in the latest month, up from a revised 6.9% during the prior month.  The 7.1% rate compares to a 5.1% 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.

Utah’s unemployment rate averaged 5.7% during 2009, 3.4% in 2008, 2.7% in 2007, and 3.0% in 2006.  These rates compare to an average Utah unemployment rate of 5.0% during the 2001 to 2005 period, and an average 3.5% rate between 1995 and 2000.

Total Utah employment fell by an estimated 27,700 jobs (down 2.3%) over the past 12 months.  This decrease compares to a loss of 33,400 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 Utah’s small businesses…and therefore, the Index. 

LOCAL PERFORMANCE

Cache County employment decreased by 900 jobs (-1.7%) in the latest 12-month period.  The area’s jobless rate was 5.1%, up from the 4.6% rate of one year ago.

Weber County experienced a decrease of 2,700 jobs (-2.9%) from a year ago.  Joblessness registered 7.6%, up from the 7.1% unemployment rate one year ago.

Davis County payrolls increased by 500 jobs (+0.5%) in the past year.  The unemployment rate was 6.5% in the latest month, up from 5.4% one year ago.

Salt Lake County employment fell by 13,900 jobs (-2.4%) over the year.  The county’s unemployment rate was 6.9% in the latest month, up from 5.7% last year.

Utah County employment declined by 4,000 jobs (-2.3%) over the last 12 months.  The area’s jobless rate was 6.8%, up from the 5.7% rate of one year ago.

Washington County payrolls declined by 1,700 jobs (-3.6%) in the past year.  The unemployment rate was 9.1% in the latest month, up from 8.3% one year ago.

 

The April 2010 Zions Bank Small Business Index for Utah will be released on May 11, 2010.

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

©Copyright 2010 Thredgold Economic Associates