Low jobless rate squeezes small firms

Tighter, and tighter, and . . . Utah's unemployment rate, most recently coming in at 3.1 percent, is continuing to put the squeeze on the state's small-business owners, according to a report released Tuesday.

But gas prices likely won't. Or, at least, not by much more than what has become the norm.

The Zions Bank Small Business Index dipped from a revised 115.6 in June to 114.4 last month. 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.

"As unemployment rates get lower and lower, in theory — and in reality — it makes it more difficult for small businesses in particular to fill open positions, and makes it pretty terrifying for those trying to keep their top people," said Jeff Thredgold, economic consultant to Zions Bank and author of the report. "That 3.1 percent is about as low as it ever gets in Utah, and at last count there were only two states in the country (Florida and South Dakota) with unemployment rates lower than ours."

The state's unemployment rate is the most heavily weighted component of the Zions index. Total employment, another factor considered for the report, rose by an estimated 55,600 jobs over the past 12 months.

That 4.8 percent growth rate moves Utah from fourth to third in the nation in job growth over the last year, Thredgold said. Job gains have a positive impact on the index, because they imply greater income creation and more spending.

Utah trails Idaho and Nevada, and is trailed by Arizona and Oregon.

"We moved from fourth to third in job growth, and we're not that far from first," Thredgold said. "It's not inconceivable that we could be talking about Utah being the strongest in the country, if this continues. Idaho I think will slow a bit, and Nevada is already slowing."

Thredgold said Utah's progress likely won't be slowed by a stunning announcement Monday from BP America that it would shutter the nation's largest oil field to replace 16 miles of feeder pipelines.

While the price of crude oil could "easily hit $80" per barrel in the next few days and weeks, it likely won't meet analysts' and some oil producers' worst case fears, Thredgold said. Those fears included crude oil at $250 per barrel, sending gas prices soaring to record heights.

But, Thredgold said, strategic petroleum reserves can be made available, the pipeline repairs likely won't take the six-plus months some have projected and the market has remained relatively stable in the wake of the announcement.

"Given the worst-case fears relative to the BP thing, you could have made a case for the market being down 100 points this morning," Thredgold said.

The Dow Jones industrial average on Tuesday fell 45.79 to 11,173.59.

---

E-mail: jnii@desnews.com