Zions Bank Small Business Index for Utah
July 2010 Release
August 10, 2010
Written by Jeff Thredgold, President, Thredgold Economic Associates
Economic Consultant to Zions Bank
SLOWING U.S. ECONOMIC GROWTH WILL IMPACT UTAH’S SMALL BUSINESSES
HIGHLIGHTS
- The Zions Bank Small Business Index for Utah was 106.9 in July 2010, down from a revised 107.1 in June 2010
- Utah’s unemployment rate was estimated at 7.2% in the latest month, down from the 7.3% rate of the prior month. Total Utah employment grew an estimated 12,200 jobs during the past 12 months
- Slowing U.S. economic growth will place a damper on Utah’s small business sector
- The U.S. economy lost an estimated 131,000 net jobs in July, worse than expectations of a 90,000 job decline. The loss of 143,000 temporary Census jobs was the culprit, with private businesses adding 71,000 jobs during the month. June job data was revised to show 96,000 additional lost jobs. The U.S. unemployment rate remained at 9.5% in July, as more than 180,000 people left the labor force
SLOWING U.S. ECONOMIC GROWTH WON’T HELP
GDP, or Gross Domestic Product, is an estimate of the value of all goods produced and services provided inside U.S. borders, measured as an annual growth rate or annual rate of decline, with the impact of inflation removed. The U.S. economy grew at a 2.4% real (after inflation) annual rate during 2010’s second quarter, just slightly less than expected. In addition, all of the U.S. economic data of the past three years was revised, in some cases for the fifth time, to more accurately reflect what is happening in the American economy.
Revised data suggests the recession was actually worse than previously thought. In addition, the U.S. economic recovery of roughly the past year has been a little weaker than originally suggested by government estimates.
What many refer to as the “Great Recession” has been over for about a year, according to a majority of forecasting economists. The actual scorekeeper for the U.S. economy, the Business Cycle Dating Committee of the National Bureau of Economic Research, is likely to make that call later this year or early in 2011. The NBER previously announced that the recession officially began in December 2007.
Weaker U.S. economic growth suggests Utah’s small business sector will be impacted somewhat negatively. The performance of the U.S. economy is a component of the Small Business Index, as is the performance of the regional and global economies.
UTAH EMPLOYMENT
The Utah unemployment rate—the most heavily weighted component of the Zions Bank Small Business Index for Utah—was estimated at 7.2% in the latest month, down from 7.3% during the prior month. The 7.2% rate compares to a 6.8% rate during the same month one year ago. A lower Utah unemployment rate is a negative contributor to the Index as it implies decreased access to Utah labor.
Utah’s unemployment rate averaged 6.6% during 2009, 3.7% in 2008, 2.8% 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 grew by an estimated 12,200 jobs (up 1.0%) over the past 12 months. This decrease compares to a revised gain of 7,700 jobs in the prior year-over-year period. Utah lost 60,700 jobs in 2009, lost 800 jobs in 2008, and added 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 gains, leading to greater income creation and stronger retail spending, have a positive impact upon Utah’s small businesses…and therefore, the Index.
The Zions Bank Small Business Index for Utah was 106.9 during July 2010, down from a revised 107.1 during June 2010. The Index measures business conditions from the viewpoint of the Utah small business owner or manager.
A lower Index number is associated with less favorable business conditions for Utah’s 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 rose by 100 jobs (0.3%) in the latest 12-month period. The area’s jobless rate was 5.0%, unchanged from the 5.0% rate of one year ago.
Weber County experienced a decrease of 1,500 jobs (-1.6%) from a year ago. Joblessness registered 7.9%, unchanged from the 7.9% unemployment rate one year ago.
Davis County payrolls increased by 1,000 jobs (1.0%) in the past year. The unemployment rate was 6.5% in the latest month, up from 6.1% one year ago.
Salt Lake County employment rose by 2,400 jobs (0.4%) over the year. The county’s unemployment rate was 6.7% in the latest month, up from 6.5% last year.
Utah County employment declined by 1,200 jobs (-0.7%) over the last 12 months. The area’s jobless rate was 6.8%, up from the 6.2% rate of one year ago.
Washington Countypayrolls declined by 1,400 jobs (-2.9%) in the past year. The unemployment rate was 9.3% in the latest month, up from 9.1% one year ago.
NATIONAL EMPLOYMENT
The U.S. unemployment rate was unchanged at 9.5% in July, matching the lowest level of the past 12 months. However, the decline resulted primarily from more than 180,000 people—presumably less optimistic about finding a job—leaving the labor force. The current 9.5% jobless rate compares to the 9.4% rate of one year ago and greatly exceeds the 5.8% rate of July 2008.
Goods-producing employment rose by 33,000 jobs in July. Manufacturing employment rose by 36,000 positions, while construction lost 11,000 jobs. Mining and logging employment rose by 8,000 jobs.
Private-sector service-providing employment rose in July by 38,000 positions. The professional & business services sector lost 13,000 jobs, while the leisure & hospitality sector added 6,000 jobs. The education & health services sector added 30,000 positions in July. Overall government employment fell by 202,000 jobs during the month.
The U.S. economy suffered a net decline of 3.6 million jobs during 2008, the worst year since 1945. The loss of 4.8 million jobs during 2009 easily surpassed the 2008 total. The net decline of 8.4 million jobs is a painful contrast to the average gain of 1.9 million net new jobs annually during 2005 to 2007.
Excluding the impact of Census and other government jobs, the economy has now added an estimated 630,000 net new jobs this year. An estimated 196,000 additional Census jobs will be ended in coming months, suggesting weak “headline” employment totals into the Fall.
The August 2010 Zions Bank Small Business Index for Utah will be released on September 7, 2010.
Jeff Thredgold
Thredgold Economic Associates
Economic Consultant to Zions Bank
(801) 614-0403
©Copyright 2010 Thredgold Economic Associates
