Utah's tight labor market continues to be a blessing and a curse for small businesses, according to a Zions Bank report released Tuesday.

The bank's Utah Small Business Index fell to 107.3 in February from a revised 109.1 in January.

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

"The economy is firing on all cylinders," said Jeff Thredgold, economic consultant to Salt Lake-based Zions Bank and author of the monthly report. "Construction is very strong. Home price appreciation is very strong. The commercial real estate sector is very strong. Utah — right now, its performance is about as good as at any time, ever."

Utah's unemployment rate, the most heavily weighted component of the index, was 3.7 percent, down from the prior month's 3.8 percent, according to the most recent data released by the state. A decline in the unemployment rate is a negative factor in the index, because it implies that small-business owners are facing a tighter labor market, making it harder to find and keep qualified employees.

Meanwhile, the economy added 52,700 new jobs over the past 12 months, "one of the strongest annualized gains in more than 10 years, and the fourth strongest job growth rate in the nation," the Zions report stated. Job gains have a positive impact on the index, because they imply greater income creation and increased spending.

"So, the boom is here," Thredgold said. "I used that word to describe Utah's economy for the first time about three weeks ago."

Thredgold attributed the job growth in part to "pent-up demand" from the economic weakness of 2001, 2002 and 2003.

"We've got strong in-migration, strong job creation, and the jobs are being created in as many high-income areas as in low-income areas," Thredgold said.

Booms often connote later busts, but Thredgold said Utah isn't necessarily destined for that dim fate.

"Booms and busts seem to be tied to one particular employment sector," he said, pointing to Colorado, which got "creamed" when its telecommunications and technology boom went south early in the decade.

"Obviously, the risk (for a bust) is there," Thredgold said. "But if we had any major weakness, it'd probably be external — a major act of terrorism, for example, or bird flu."

Last week, the U.S. Labor Department reported a net gain of 243,000 jobs nationwide in February, beating Wall Street's projected gain. The national unemployment rate registered 4.8 percent, up from 4.7 percent in January.

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