Employment issues weigh heavily on index

Uncertainties at home and abroad clouded an otherwise strong report on Utah's small-business environment.

The Zions Bank Small Business Index, released Tuesday, rose to 101.6 in July from a revised 100.3 in June. 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 Utah's small businesses. The index uses 100.0 for calendar year 1997 as its base year.

While the Utah index climbed, Zions' economic consultant Jeff Thredgold said uncertainties domestically and overseas are taking their toll on the broader economy.

"America's businessmen and businesswomen operate in the world's most vibrant and competitive marketplace," Thredgold wrote in the report. "What business people desire is a somewhat predictable outlook for the economic and business environment. What they see today is a series of unanswered questions that has recently led to slower U.S. economic growth and a sharp drop in American job creation."

Employment issues weigh heaviest on the index, and Utah reported some encouraging signs. The state's unemployment rate rose slightly to 4.7 percent in June, the most recent monthly data available, from 4.6 percent in May. A higher unemployment rate is a positive factor in the index because it implies that businesses have a larger labor pool from which to recruit new workers. In 2003, the state's unemployment rate averaged 5.6 percent.

Total employment rose by about 20,900 jobs over the past 12 months, the strongest gain since 2000, the index reported. Job creation has a positive impact on the index because it implies greater income generation and retail spending.

"The (index) is reflecting continuing improvement in the Utah economy, primarily reflected by substantially stronger job growth," Thredgold said. "We had three years of modest net declines in employment. That hurts when you're used to adding 20,000 or 30,000 or 40,000 jobs a year."

Now, Thredgold said, "We're seeing better performance in terms of employment and a stabilization in the unemployment rate. We've got more people at work and more job creation, which translates to stronger income creation and a stronger economy."

That strength wasn't reflected in July employment numbers released by the U.S. Labor Department. The department reported a net gain of only 32,000 jobs, about one-eighth the increase predicted by Wall Street. The national numbers reflect month-to-month changes, while Utah's total employment figures reflect job gains or losses during a year-over period, said Mark Knold, senior economist with the Utah Department of Workforce Services.