Economic conditions improved for Utah's small-business sector last month, and the future remains bright for the state as whole, according to a new report.

The Zions Bank Small Business Index for Utah was 105.4 in May, up from a revised 104.7 in April.

The Salt Lake-based bank's index, a measure of business conditions from the viewpoint of the small-business owner or manager, 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 Utah unemployment rate, which is the most heavily weighted component of the index, was estimated at 2.5 percent in April, the most recent data available, up slightly from the prior month's 2.4 percent rate. A higher unemployment rate is a positive contributor to the index, because it implies greater access to labor.

Total employment in the state rose by an estimated 54,100 jobs, up 4.5 percent, over the past 12 months. That growth rate is one of Utah's strongest in more than 10 years, the Zions report said, and it is the strongest job growth rate in the nation.

Stronger job gains have a positive effect on the small-business index, because they lead to better income creation and stronger retail spending.

Jeff Thredgold, president of Thredgold Economic Associates and economic consultant to Zions Bank, said Utah remains in a sweet spot for jobs and growth. And while Thredgold, who writes the Zions report, anticipates some slowdown in the Utah economy, he said its growth should remain in the top five or 10 states nationwide.

"Any slowdown to 3 percent job growth over the next 12 months would allow us to catch our breath a little bit," he said.

On the national level, the U.S. Commerce Department's latest revision of gross domestic product for the year's first quarter came in at 0.6 percent, which was lower than the 1.3 percent estimate in April. However, the Zions report said other recent economic data suggest GDP will increase to a 2.2 percent to 3 percent rate for the rest of the year.

"We continue to expect the U.S. economy to gain strength as 2007 matures," Thredgold wrote in the report. "We also expect to see a return to stronger economic growth in 2008."

Thredgold said a stronger U.S. economy will provide a boost to both the Western region and to Utah — not that the state is desperate for a boost.

"What we don't need right now is more help in Utah, because the economy is doing incredibly well as it is," he said. "The biggest challenge in Utah is that it's very difficult to find people to hire. ...

"We keep expecting the Utah economy to slow down, because you can't find people to hire, and yet we're getting enough strong in-migration from around the country ... that provides more people to be hired and provides more demand for housing."

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E-mail: gkratz@desnews.com