Small-business conditions remain weak

Unemployment continued to climb in Utah in March, and a measure of the strength of small business in the state likewise didn't find much about which to boast.

The Zions Bank Small Business Index, released Tuesday, found general weakness, although it crept up slightly in March to 70.3 from a revised 68.9 in February.

A higher number indicates better conditions from the viewpoint of a small-business manager or owner. The index uses 100.0 for calendar year 1997 as its base year. Index numbers are revised as data becomes available.

The unemployment rate in the Beehive State, the most heavily weighted component of the index, was 5.1 percent in March. Although significantly better than the national unemployment rate of 8.5 percent, it still showed a loss of about 26,000 Utah jobs over the course of the past year.

A higher unemployment rate can actually be a good thing for the small-business index, because the wider the pool of potential employees, the more from which a small-business manager or owner can choose to hire. Right now, though, the job losses and their negative impact in terms of reducing income creation and harming retail spending have offset any pluses, creating a negative impact on the index.

And experts predict that unemployment will go higher still, even if the recession ends later this year. The clock started ticking on the recession in December 2007, and now, 16 months later, optimists say it should start to turn around in the middle or by the end of the year, while pessimists say it will linger well into 2010.

Nationally, the recession has been marked by 5.1 million lost jobs, almost two-thirds of them in the last five months.

Two years ago, when the economy was doing well, small businesses had a lot of people walking through the doors to do business but a hard time filling all their positions. Now they have more choices to hire but fewer customers walking through the door, and that's a problem, said Jeff Thredgold, Zions Bank economic consultant. But he predicts that later this year, we'll see more consistent improvement in the index and a better outlook for small businesses.

E-MAIL: lois@desnews.com