Utah's small businesses saw better conditions in November, thanks in part to a slightly higher unemployment rate, according to a report released Tuesday.
The Zions Bank Small Business Index for Utah was 109.5 in November, up from a revised 108.7 in October.
A higher figure is associated with better business conditions for the state's small businesses. The index uses 100.0 for calendar year 1997 as its base. The highest level since 1992 was 126.3 in 1994, which was followed up a year later with an index of 124.3. The lowest level since 1992 was 87.7 in 2001.
The state unemployment rate, the most heavily weighted component of the index, was at an estimated 2.8 percent, up from 2.7 percent the previous month and 2.6 percent a year earlier.
"A jobless rate of 2.3 percent in February ranked with the lowest ever recorded in the state and was the lowest in the continental U.S.," wrote Jeff Thredgold, president of Thredgold Economic Associates, who is economic consultant to Zions Bank and author of the report. "A higher Utah unemployment rate is a positive contributor to the index as it implies increased access to Utah labor."
By comparison, the state's unemployment rate averaged 4.3 percent as recently as 2005 and 5.7 percent in both 2002 and 2003, he noted.
The state's total employment has risen an estimated 52,500 jobs during the past 12 months. The 4.3 percent rate is one of the strongest annualized gains in Utah in more than 10 years and is the strongest job growth rate in the nation. The prior-year period saw a revised gain of 53,600 jobs.
"More recently, weaker job gains, leading to lesser income creation and softer retail spending, have a negative impact upon Utah's small businesses and, therefore, the index," Thredgold wrote.
As for the national scene, Thredgold said, the U.S. economy faces a 30 percent to 40 percent chance of a recession during the next 12 months. "Extreme volatility of the U.S. economy during 2007, combined with a clouded outlook for 2008, makes planning difficult for Utah's small businesses," he wrote.
Thredgold said the recently revised third-quarter real annual U.S. economic growth rate of 4.9 percent was the strongest quarter in five years.
"Unfortunately, such solid growth will not continue," he wrote.Most forecasters see growth in the current quarter within a range of 0.2 percent to 1.5 percent and suggest a modest improvement in 2008's first quarter, followed by slightly better performance as the year continues. Other forecasters "speak loudly of recession that is about to engulf the economy, led by national housing weakness and global credit anxiety," he said.