Jobless rate hurting small businesses

Utah's small businesses continue to suffer disproportionately from the state's low-unemployment environment as skilled workers become harder to find, according to a Zions Bank report.

The Zions Bank Small Business Index, released Tuesday, declined to 110.8 for November from a revised 112.2 in October. 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.

"It's more of the same, but even more pronounced this month," said Kendall Oliphant, senior vice president at Salt Lake-based Thredgold Economic Associates, which prepared the report. "The big news is the unemployment rate, which dropped to 2.5 percent, a level we just didn't think we'd see. We didn't think it was possible to get that low.

"That level of unemployment is great news for workers and people who are looking for a job. But it is not great news for companies looking to find workers. Especially small businesses."

The unemployment rate, the most heavily weighted component of the index, registered 2.5 percent, according to the state's most recent data, down from the prior month's 2.8 percent. A lower unemployment rate is a negative contributor to the index because it suggests businesses are facing an increasingly shallow labor pool.

That rate is the lowest-ever recorded in Utah and the lowest in the continental United States, according to the Zions report. By comparison, the national unemployment rate was 4.5 percent in November, up from October's 4.4 percent, according to the U.S. Labor Department.

But Utah's low jobless rate can't hold ... can it?

"Companies are having a hard time finding workers, especially skilled workers," Oliphant said. "So we'll probably see a correction. We'll probably see that rate go up a little bit, because if companies can't find workers, they can't fill orders. They can't create new jobs."

Job growth, another component of the index, rose 5 percent during the year-over period, according to the latest state data. Job growth is a positive contributor to the index because it suggests income generation and stronger retail spending.

"Utah's job growth was No. 1 in the country this past month," Oliphant said. "Job growth nationwide was about 1.4 percent, and in Utah it was 5 percent. That's huge. The Rocky Mountain area is the strongest region in the country right now speaking in economic terms."

Oliphant pointed to growth in energy-related industries throughout the region and the "trickle down" effect on other sectors of local economies to explain some of the region's growth.