Utah job growth rates are strong

Despite a relatively strong economic recovery, Utah's financial institutions continue to report elevated past-due loan levels and past-due mortgage ratios, according to a report released Wednesday by the Federal Deposit Insurance Corp.

In its Spring 2005 Utah Profile, the FDIC reported that Utah's economy was strengthened by better-than-average job growth, which is expected to remain robust through 2005.

"Nonfarm jobs in the state grew 2.9 percent in the year ending fourth quarter 2004, a significant improvement when compared with the minuscule 0.8 percent growth rate recorded the previous year," the FDIC report stated.

Job-growth rates in Provo-Orem and the Salt Lake metropolitan area were among the fastest in the nation, the report stated, buoyed by gains in the professional and business services sector.

In addition to strong job growth, Judy Plock, acting regional manager of the FDIC's San Francisco office, pointed to Utah's booming industrial loan bank market and earnings improvements at traditional banks as high points in the state's economy.

However, Plock said, there are some soft pockets to keep an eye on.

The FDIC reported Wednesday that Utah continues to struggle with past-due loan delinquencies, past-due mortgage loans and commercial real estate vacancies.

"In Salt Lake City, the fourth quarter 2004 year-over-year office vacancy rate declined from 20.5 percent to 19.0 percent, but remained well above the 15.4 percent national rate," the FDIC reported in its Utah Profile. "Over the next two years, industry experts predict no significant change in office vacancy rates but anticipate a slight increase in industrial vacancy rates as completions outpace absorption."

Moreover, the FDIC reported, office rents in Salt Lake City, as of the fourth quarter of 2004, declined 10 percent from their fourth quarter 2001 peak, while industrial rents declined 10 percent since their third quarter 2001 peak.

"Going forward, some landlords in Salt Lake City may continue to experience lease re-pricing pressures as long-term contracts established during a better rental rate environment expire," according to the report.

Loan delinquencies, including home mortgage loans, also remain a sore spot for Utah, said Barbara Ryan, associate director for the FDIC's Division of Insurance & Research Regional Operations.