Utah small-business index slips in September

A recent drop in unemployment put some pressure on Utah's small businesses last month, according to a Zions Bank report released Tuesday.

The bank's Small Business Index for Utah fell to 112.0 in September from a revised 113.6 in August.

The index measures business conditions from the viewpoint of the Utah small-business owner or manager, with a higher number indicating favorable conditions. It uses 100 for calendar year 1997 as a base and includes revisions to various historical or forecast components as they become available.

Jeff Thredgold, author of the report and economic consultant to Zions Bank, attributed September's findings to a sharp decline in unemployment — the most heavily weighted component of the index. Utah's unemployment rate was estimated at 4.4 percent in August, the most recent data available, down from the prior month's 4.7 percent rate. Total employment was up an estimated 39,500 jobs during the past 12 months

"The index declined because we had a sharp decline in the unemployment rate, which is kind of counterintuitive, I know," Thredgold said. "When the unemployment rate goes down, it's a good thing for the state. . . . But if you're a small-business owner or manager, life just became more challenging. And since the index is from the point of view of the small businesses, life has became more difficult in terms of filling positions and keeping key people."

However, Thredgold added that lower unemployment usually has offsets, many of which benefit small businesses: when people have work, personal income increases, which generally stimulates retail spending.

On a broader scale, the U.S. Labor Department reported earlier this month that the nation's economy lost 35,000 jobs in September — which was less than expected, following Hurricane Katrina. The department also revised its jobless numbers higher by 77,000 jobs for the past two months.

The U.S. unemployment rate rose to 5.1 percent.

Next month's data are expected to show more job losses associated with Katrina and Hurricane Rita. However, Thredgold wrote, "job gains tied to enormous rebuilding efforts in the South in coming quarters will offset hurricane-related losses."

Over the next year, Thredgold predicted that the economy — regional, national and global — will slow.

"We expect to see some additional declines in Utah's unemployment rate over the next 12 to 18 months," he said. "Not back to the conditions of five, six or seven years ago, which were extraordinarily tight."

But, he said, "I think we'll see a little bit of slowing in the Utah economy, as we'll see in the Intermountain area. Job creation will come in at 3.6 percent to 3.7 percent. We're still running fourth in the country in percentage growth of employment, but over time that may slow to 2.6 percent to 2.7 percent. Which is still good growth. But the global economy shouldn't be quite as strong, the national economy won't be quite as strong, and the regional economy won't be quite as strong."

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