Economic Expansion Rates Remain Stable in Utah, U.S.

By Sun Advocate

Economic growth remains relatively positive in Utah and across the United States, despite a significant manufacturing weakness.
The growth pace of the nation’s economy improved during third quarter, but the 3.1 percent real annualized expansion rate was slightly weaker than expected by budget analysts.
Nevertheless, the third quarter rate was up from the sluggish 1.3 percent second quarter pace, according to the latest Zion’s Bank small business index report.
Growth in the current quarter is projected to register at 2.5percent, but financial analysts expect strengthening of the economy in the first half of 2003’s first half.
The small business index for Utah dipped to 77.1 in October 2002 versus a revised 77.9 in September, pointed out the report.
Total Utah employment fell by 12,900 jobs during the last 12 months, an improvement over larger declines in recent periods.
The U.S. Federal Reserve is likely to cut its key short-term interest rate at least once before the end of the year, indicated the Utah small business index report.
Weakness in job creation and continued anxiety in financial markets have raised the odds of further interest rate cuts.
The Federal Reserve cut the key short-term interest rate – the federal funds rate – 11 times last year.
In contrast, the Federal Reserve has made no change to date in 2002, pointed out the Utah small business index report.
The federal funds rate is currently at a 41-year low, registering at 1.75 percent.
The Federal Reserve could cut the overnight interest rate on excess funds between banks to 1.50 percent or 1.25 percent before the current year ends, indicated the Utah business index report.
The Utah unemployment rate – the most heavily weighted component of the small business index – was 5.1 percent in October 2002, down from September’s 5.3 percent rate.
March’s 5.9 percent jobless rate was the highest unemployment level posted statewide since 1987. October’s 5.1 percent rate compared to a jobless rate of 4.8 percent during October 2001.
A lower statewide unemployment rate is a negative contributor to the index since it implies decreased access to Utah labor, explained the bank analysts.
Utah’s unemployment rate averaged 4.4 percent in 2001.
By comparison, the 3.2 percent average during 2000 was one of the lowest annual rates since the early 1950s.
The jobless numbers compare to average Utah unemployment rates of 3.7 percent during 1999, 3.8 percent in 1998, and 3.1 percent during 1997.
Total employment opportunities at locations throughout Utah declined by 12,900 jobs – down 1.2 percent – during the last 12 months, pointed out the small business index.
The drop compares to the revised 16,000 jobs lost in the prior year-over-year period and the 19,700 year-over-year decline in August.
Year-over-year job losses experienced across Utah in 2002 represent the first declines in 20 years, according to the small business index.
The totals compare to gains averaging 38,300 new jobs annually during the 1994-2000 period.
The nation’s unemployment rate was 5.7 percent in October, up slightly from September’s 5.6 percent rate.
The U.S. unemployment rate reached an eight-year high of 6.0 percent in April, and could again approach 6.0 percent in coming months.
The U.S. Department of Labor’s business survey reported a net loss of 5,000 employment opportunities in the nationwide economy in October.
September’s prior estimate of a 43,000 loss was revised to a loss of 13,000 jobs, while August’s employment gain was revised 16,000 higher to 123,000 positions in the labor force, continued the small business index report.
Job losses in October and September were the first back-to-back declines registered in the U.S. in six months.
The national economy added a net 193,000 employment opportunities during the last five months, after losing more than 1.5 million jobs in the preceding one-year period.
The goods-producing sector of the U.S. economy decreased by 75,000 employment opportunities in October, including the loss of 49,000 more manufacturing positions.
The nation’s manufacturing sector has lost roughly 8 percent of its prior total employment during the past 24 months, continued the Utah small business analysis.
Construction employment was down 27,000 jobs in October after gaining 48,000 jobs in the two prior months.
The broad service-providing sector added 70,000 jobs in October.
The finance, insurance, and real estate industry added 58,000 employment positions in the last two months, primarily to meet record demand for mortgage refinance activity.
The “temporary help” sector lost 56,000 jobs in October, after added 51,000 employment opportunities across the nation in the prior two months, pointed out the small business index report.
Weak job growth or actual employment declines, leading to lesser income creation and weaker retail spending, has a negative impact upon Utah’s small businesses.
The Zions Bank small business index for Utah dipped to 77.1 during October 2002 from a revised 77.9 during September 2002.
The index measures conditions from the viewpoint of the Utah small business owner or manager, according to financial consultants.
A lower number is associated with less favorable conditions for Utah’s small businesses, explained the report.
The index uses 100.0 for calendar year 1997 as its base year.
The analysis also includes revisions to various historical or forecast components, concluded the latest Utah small business index report.