A tight labor market is putting the squeeze on Utah's small-business owners, according to a Zions Bank report released Tuesday.

However, the report's author said the state's economy is "rockin' and rollin'," and job growth is occurring across the board, most notably in higher-paying industries.

Zions Bank's Small Business Index for Utah declined to 109.7 in December 2005, the bank reported Tuesday, from a revised 113.2 in November.

The index measures business conditions from the viewpoint of the Utah small-business owner or manager. It uses 100 for calendar year 1997 as its base and includes revisions to various historical or forecast components as they become available. A higher figure is associated with favorable business conditions.

"On balance, we're doing extraordinarily well," said Jeff Thredgold, economic consultant to Salt Lake-based Zions Bank and president of Thredgold Economic Associates. "In terms of job growth, we're third in the country. We're essentially at full employment, with stronger gains in home price appreciation, and the Utah state government is sitting on a $1 billion surplus. That's something I don't know that we've seen before."

The most heavily weighted component of the Zions Index, Utah's unemployment rate, was estimated at 4 percent in November (the latest data available), down sharply from the prior month's 4.5 percent rate.

A decline in the unemployment rate is a negative factor in the index because it implies that small-business owners are facing a tighter labor market, making it harder to find and keep qualified employees. And a sharp decline, according to Thredgold, indicates two possibilities.

"One, that (the figure) will probably be revised. The other is that the Utah economy is rockin' and rollin'," Thredgold said. "But that sharp decline also suggests more difficulty (for small-business owners) in filling positions, fewer applicants, more pressure on retaining your current good workers, and generally makes life a little more difficult for small-business owners in Utah."

Utah's tighter labor markets are part of a larger national — and more particularly, regional — issue, Thredgold said. Idaho, for example, reported its lowest unemployment rate on record, at 3.4 percent. When measured by percent gain, Thredgold reported that the nation's top-ranking states for job creation are all in the West: Nevada, Arizona, Utah and Idaho.

The other major factor in the Zions index, Utah's total employment, rose by about 41,200 jobs over the past 12 months. At 3.6 percent, Utah's employment growth rate is the fourth-strongest in the nation, Thredgold wrote in the Zions report. Job gains have a positive impact on the index, because they imply greater income creation and increased spending.