SALT LAKE CITY, Utah; October 11, 2011 — The Zions Bank Small Business Index for Utah was 119.4 in September 2011, up from a revised 117.2 in August 2011.
- Utah’s unemployment rate was estimated at 7.6% in the latest month, up from the 7.5% rate of the prior month. Total Utah employment grew by an estimated 34,400 jobs during the past 12 months
- Salt Lake County employment rose by 14,800 jobs (3.5%) over the year. The county’s unemployment rate was 7.3% in the latest month, down from 7.4% last year
- Low confidence levels of American consumers and business managers have led to extremely soft performance of the American economy since the Great Recession officially ended in June 2009
- The U.S. economy saw a gain of 103,000 net new jobs during September, exceeding an expected 60,000 rise. In addition, estimated job gains of the two prior months were revised higher by 99,000 jobs. The U.S. unemployment rate remained at 9.1%
A combination of 1) the most severe U.S. recession since the Great Depression; 2) a largely anemic U.S. economic recovery since it began in June 2009; 3) global investor anxiety about sovereign debt problems across Europe; and 4) enormous concern about the direction of government and unprecedented budget deficits has contributed to ongoing weak readings of consumer confidence (The Conference Board). Desired progress in coming months in Washington DC to slow government spending and reduce future budget deficits would go a long way in rebuilding confidence levels…and by connection, contribute to more vibrant U.S. economic performance.
A confident American consumer is willing to spend more and invest more, while a consumer who lacks such confidence does less. The same is true for business managers, who might be willing to add to employment levels when confidence is rising, but stay on the sidelines when confidence is low.
The latest U.S. employment data is likely to weaken the “recession is coming again” view of many forecasters. September job gains were stronger than expected, while previously reported job gains in July and August saw significant upward revisions.
An opportunity to reduce future U.S. government budget deficits in a substantial way is currently in the hands of the “super committee” of six Republicans and six Democrats of the Congress. They are to report their recommendations (if any) no later than November 23. An agreement to set aside extremely partisan politics and work together to address the nation’s dangerous spending path would go a long way to rebuilding confidence of both consumers and business managers. American stocks have moved higher in recent days as “better news” relative to addressing high debt levels emerges from Europe.
The level of consumer confidence is a component of the U.S. Business Index which accompanies the Utah Small Business Index each month. Rising confidence across the nation, and across the West, would benefit Utah’s small business sector.
The Zions Bank Small Business Index for Utah was 119.4 in September 2011, up from a revised 117.2 in August 2011. The Index measures business conditions from the viewpoint of the Utah small business owner or manager.
A higher Index number is associated with more favorable business conditions for Utah’s small businesses. The Index uses 100.0 for calendar year 1997 as its base year. The Index includes revisions to various historical and new forecast components as they become available.
The Utah unemployment rate—the most heavily weighted component of the Zions Bank Small Business Index for Utah—was estimated at 7.6% in the latest month, up from the prior month’s 7.5% rate. The 7.6% rate compares to a similar 7.6% rate during the same month one year ago. A higher Utah unemployment rate is a positive contributor to the Index as it implies increased access to Utah labor. Other associated factors typically tied to a higher unemployment rate, such as lesser job creation, lesser income gains, and lower retail sales pull the Index lower.
Utah’s unemployment rate averaged 7.7 during 2010, 7.1% during 2009, 3.7% in 2008, 2.7% in 2007, and 2.9% in 2006. These rates compare to an average Utah unemployment rate of 5.0% during the 2001 to 2005 period, and an average 3.5% rate between 1995 and 2000.
Total Utah employment grew by an estimated 34,400 jobs (up 2.9%) over the past 12 months. This increase compares to a revised gain of 28,500 jobs in the prior year-over-year period. Utah lost 7,800 jobs in 2010, lost 63,700 jobs in 2009, lost 800 jobs in 2008, and added 49,600 jobs in 2007, 55,700 jobs in 2006, 43,700 jobs in 2005, and 30,200 jobs in 2004.
These totals compare to gains averaging 38,000 new jobs annually during the 1994-2000 period and a net loss of 1,300 jobs in 2001 through 2003. More recently, job gains leading to greater income creation and stronger retail spending, have a positive impact upon Utah’s small businesses…and therefore, the Index.
Cache County employment grew by 900 jobs (1.8%) in the latest 12-month period. The area’s jobless rate was 5.3%, down from the 5.8% rate of one year ago.
Weber County gained 700 jobs (0.8%) in the latest 12-month period. Joblessness registered 8.6%, unchanged from the 8.6% unemployment rate one year ago.
Davis County payrolls increased by 3,600 jobs (3.5%) in the past year. The unemployment rate was 7.0% in the latest month, unchanged from 7.0% one year ago.
Salt Lake County employment rose by 14,800 jobs (3.5%) over the year. The county’s unemployment rate was 7.3% in the latest month, down from 7.4% last year.
Utah County employment rose by 5,300 jobs (3.1%) over the last 12 months.The area’s jobless rate was 7.5%, down from the 7.9% rate of one year ago.
Washington County payrolls decreased by 100 jobs (-0.3%) in the past year.The unemployment rate was 9.4% in the latest month, down from 9.9% one year ago.
The U.S. Department of Labor reported a gain of 103,000 net new jobs in September 2011, stronger than the 60,000 net gain expected. In addition, estimated job gains of the two prior months were revised higher by 99,000 jobs.
The U.S. unemployment rate remained at 9.1% in September, matching the rate of the two prior months. The current 9.1% jobless rate compares to the 9.6% rate of one year ago, the 9.8% rate of September 2009, and the 6.2% rate during September 2008.
Goods producing employment rose by 18,000 jobs in September, with a loss in manufacturing (down 13,000 jobs) more than offset by a rise in construction (up 26,000 jobs) and mining & logging employment (up 5,000 jobs). Private-sector service providing employment rose by 119,000 jobs in September, led by gains in professional & business services (up 48,000 jobs) and education & health services (up 45,000 jobs). The information sector added 34,000 jobs, tied to the return of 45,000 formerly striking Verizon workers, which has now been settled. Overall government employment fell by another 34,000 jobs during the month.
The U.S. economy suffered a net decline of 3.6 million jobs during 2008, the worst year since 1945. The net loss of 5.1 million jobs during 2009 easily surpassed the 2008 total. The American economy added 940,000 net new jobs during 2010, or 78,000 per month. Gains-to-date during 2011 have totaled 1,074,000, or 119,000 per month.
Roughly 130,000 net new jobs need to be added monthly just to meet the needs of a rising population, and just to keep the unemployment rate stable. Consistently stronger gains are necessary to lead the unemployment rate lower.
The October 2011 Zions Bank Small Business Index for Utah will be released on November 8, 2011.
Thredgold Economic Associates
Economic Consultant to Zions Bank
©2011 Thredgold Economic Associates
About Zions Bank
Zions Bank, a division of ZB, N.A., operates 124 full-service financial centers throughout Utah and Idaho. In addition to offering a wide range of traditional banking services, Zions Bank is also a leader in small business lending and has consistently ranked as the No. 1 lender of U.S. Small Business Administration 7(a) loans in Utah for the past 22 years and Idaho’s Boise District for the past 14 years. Founded in 1873, Zions Bank has been serving the communities of the Intermountain West for more than 140 years. Additional information is available at www.zionsbank.com.