Labor shortages have and will slow Utah's economy, straining the health care, oil and gas exploration and transportation industries and, possibly, the LDS Church's downtown redevelopment project, according to a report released Tuesday by Zions Bank.

The bank's Small Business Index fell to 114.2 in September from a revised 115.8 in August. 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.

The most heavily weighted component of the index is the state's unemployment rate, which registered 3.2 percent, according to the state's most recent data, down from the prior month's already low 3.4 percent.

"It's about as low as you can go," said Jeff Thredgold, economic consultant to Salt Lake-based Zions Bank and head of Thredgold Economic Associates. "Utah's economy is still booming. We're doing extremely well. But we are at the point now where extra-tight labor markets are slowing us down a little bit."

Job growth in a community or state is essentially a function of supply and demand, Thredgold said, and typically involves a demand for workers. But sometimes, as in Utah right now, the issue is one of supply of workers.

Industries from health care to transportation to education and construction are all reporting difficulties finding skilled workers, Thredgold said. That shortage likely will continue into 2007 — which means slowing job growth from 4.4 percent for the past 12 months to something like 2.2 percent, according to Thredgold.

"I think the biggest surprise in that regard will be relative to (The Church of Jesus Christ of Latter-day Saints') project downtown," Thredgold said. "They're going to have a challenge finding people to work there. Most people with skills in construction and demolition are already working. They're probably going to find it difficult to be fully-staffed."

While labor shortages likely won't stall or slow the project, Thredgold said they could jack up the price.

"I don't think it'll slow the project, but it may mean that their costs may be higher than they currently plan," he said. "They are competing with other projects."

Utah's hot job market contrasts with data released last week by the U.S. Labor Department, which reported that 51,000 new jobs were created last month, short of analysts' expectations. The nation's unemployment rate was 4.6 percent.

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