Job growth helps boost index

A year-over-year boost in total employment in Utah helped nudge a monthly business-conditions indicator higher in June.

The Zions Bank Small Business Index for Utah rose to 105.4 in June, up from a revised 105.2 in May, despite the most heavily weighted component remaining unchanged during that time.

Helping the index increase was that total employment in the state was up an estimated 54,000 from a year ago.

"The 4.5 percent rise is one of the strongest annualized Utah gains in more than 10 years and is the strongest job growth rate in the nation," said the report, compiled by Jeff Thredgold of Thredgold Economic Associates and economic consultant to Zions Bank.

The index, released Tuesday, reflects 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 some historical and new forecast components as they become available.

Strong job gains increase the index because they indicate better income creation and stronger retail spending.

But the heaviest component of the index remained the same between May and June — a 2.5 percent unemployment rate. A higher unemployment rate boosts the index because it implies better access to Utah labor for employers.

A year ago, the unemployment rate was 3 percent, but it had shrunk to a mere 2.3 percent in February. That was on a scale with the lowest rate ever recorded in Utah and the lowest in the continental U.S.

As for other index components, strong commercial real estate activity has helped offset a decline in the single-family residential construction sector, in which small businesses within the state serve as suppliers. Thredgold wrote that slower single-family home construction activity during the past 18 months is "tied to constant negative national press" about the housing bubble, higher mortgage interest rates and slightly tighter lending standards.

"Given the strong rise in average Utah home prices of the past 12 months, a share of potential homebuyers also no longer qualify to purchase homes," the report states.

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