Utah small-business index falls to 104.3

The tightening labor situation is continuing to strain Utah's small businesses, according to a report released Tuesday by Zions Bank.

The bank's Small Business Index for Utah was 104.3 in March, down from a revised 106.3 in February.

The index 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.

"Obviously, (March's decline) was just tied to the plunge in the unemployment rate," said Jeff Thredgold, economic consultant to Zions Bank and president of Thredgold Economic Associates. Utah's unemployment rate fell to 2.3 percent in February, the latest data available, from 2.6 percent in January.

"This tight labor availability we've been talking about for the last 18-24 months got tighter," Thredgold said. "That's basically it. At the national level, anytime you get down to between 4 percent and 5 percent, that's pretty much considered full employment. We're at 2.3 (percent). So what that tells you is that companies, even more than before, are struggling to find people to hire, especially skilled people.

"If you're running a small business, you're frustrated in your inability to fill open positions, and you are scared to death of losing your best players to somebody else."

By comparison, the U.S. Labor Department reported earlier this month that the national unemployment rate was 4.4 percent in March, down from February's 4.5 percent rate.

Total employment for Utah, another factor in the index, rose by about 52,000 jobs over the past 12 months, a 4.4 percent increase, Thredgold reported. That gain had a positive effect on the index, because it suggests better income creation and stronger retail spending.

Wednesday's report was "good news in terms of an economy approaching or reaching its potential — or moving in that direction, anyway," Thredgold said. "But it's tough, if you're trying to be fully employed, especially at a small business."

Thredgold ticked off the pertinent numbers: Utah's 2.3 percent unemployment rate was tied for the lowest in the country. Its 4.4 percent job growth led the nation. Utah reported the single best housing market in 2006. In 2005-06, Utah saw about 70,000 more people move into the state than move out.

"It's one thing to have low unemployment if you have young people leaving the state, but when you've got 70,000 people moving in, net increase over two years, and your unemployment is 2.3 percent, that's just amazing," Thredgold said. "I expect the economy to slow down a little bit just because of this labor issue, and because the national economy has slowed down a little bit. But right now, we are the single strongest state economy in the country."

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