Energy prices could hurt jobs

A prolonged run-up in energy prices could put the brakes on Utah's job growth, according to the latest report from the Utah Department of Workforce Services.

Utah's unemployment rate for March was 4.8 percent, the department reported Tuesday, equaling February's unrevised rate and down 0.5 percent from March 2004. About 59,200 Utahns were unemployed last month, compared to 64,000 during the same month a year ago.

Total employment growth, the year-over change in the number of nonfarm wage and salaried jobs, was 3.7 percent — the strongest since 1997, according to the department.

But Mark Knold, the department's senior economist, said a prolonged increase in energy prices could put a damper on the rate of job growth going forward.

"Price increases that hit such a large volume of people — in this case, all of us, whether it's through fueling our cars or paying more for transportation costs like trucking goods — are bound to have an effect," Knold said. "We saw a price increase in the latter part of 2004, and it really didn't do anything. It's possible that this will be the same. This (the current price hike) is still in the developing stages, but the talk is that this one might go higher and last longer."

At current levels, fuel prices are "causing griping," Knold said, "but I'm not sure that it's causing a change in buying behavior. And that's what we'll be watching for, because changes in buying behavior can have the effect of turning the economy back in the other direction. The one thing it definitely does do, and probably will do, is put the brakes on the current expansion."

Last month, Utah saw job gains in every sector. Trade, transportation and utilities led the way, adding 6,700 jobs. The professional and business services sector ran a close second, adding 6,600 new jobs. Construction continued its impressive growth rate, bringing on 5,700 new workers. The much-watched, still-lagging information sector showed modest growth, adding 1,200 jobs.

"It's starting to get a little momentum going," Knold said. "It's still one of the slowest to respond to the recovery, but the momentum is starting to go up rather than down, and we'll take that.

"The sector still hasn't shaken off it's lethargy. They really overbuilt themselves during the 1990s, when it was an emerging sector. But it's like the excessive growth of a child. The body grows, and the internals have to catch up. It'll take time."

Going forward, Knold said growth is likely to continue, though possibly at a slower rate.

"We're at 3.7 percent (jjob growth), and we've been here for three months," he said. "I think this is the high point of the current rebound. As the rest of the year progresses, we'll probably go from 3.7 percent to maybe 3 percent or 3.3 percent. It'll be a slowing in the rate of growth, but by no means a stopping of that growth."

Earlier this month, the U.S. Labor Department reported that total U.S. nonfarm payroll employment increased by 110,000 (seasonally adjusted) in March, missing by nearly half what analysts had predicted. The nation's unemployment rate declined to 5.2 percent, the department reported.

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E-mail: jnii@desnews.com