Economy still strong

Utah's economy is strong and should build modestly toward year's end, but higher energy prices and rising interest rates will act as a damper on growth, according to a report released Tuesday by Zions Bank.

"Utah is part of a larger regional economy that is doing well, a national economy that is doing well and a global economy that is doing well," said Jeff Thredgold, economic consultant to Zions Bank. "Job growth is strong. It is getting tougher and tougher to find skilled people to hire. We're now number two in the country in job growth, on a percentage basis over the last 12 months, behind only Nevada."

However, the Zions Bank Small Business Index showed slight slowing, dipping to 105.9 in March from a revised 106.6 in February.

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 conditions for Utah's small businesses. The index uses 100.0 for calendar year 1997 as its base.

Total employment in Utah rose by about 39,700 jobs, or 3.7 percent, over the past 12 months, Thredgold reported. Job gains have a positive impact on the index, because they suggest there will be greater income and retail spending.

The most heavily weighted component of Zions' index, the state's unemployment rate, was estimated at 4.8 percent in February (the latest data available), compared to a revised 4.9 percent the month before.

"Utah is and has been getting stronger, but I do think that job growth a year from now will not be as strong as it is now," Thredgold said. "We'll probably end this year at about 3 percent to 3.5 percent job growth. Next year might be more like 2.5 percent to 3 percent."

The U.S. Department of Labor reported last week that 110,000 net new jobs were created nationwide in March, half of what economists had predicted. The nation's unemployment rate was 5.2 percent in March, down from February's 5.4 percent.

Still, Thredgold wrote in the index, "Solid U.S. and global economic growth remains on track. We expect a net average gain of 175,000-200,000 net new jobs monthly this year, in line with the 183,000 average monthly gain during 2004. Reasonable job gains should occur even as short-term interest rates continue to rise."

Thredgold said he expects the Federal Reserve to raise short term interest rates on May 3 and again on June 30. That, combined with continued high energy prices, likely will temper economic growth going forward, he said.

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E-mail: jnii@desnews.com