Carbon County economy records expanding employment in January
Carbon County's economy posted a 0.9 percent employment expansion rate in January.
The latest data compiled by the Utah Department of Workforce Service indicate that participation in the local labor force registered at 9,027 last month compared to the 8,947 non-farm wage and salaried jobs reported across Carbon County in January 2007.
At the state level, the number of non-farm wage and salaried jobs reported last month showed that Utah's employment trend continued moving downward in January.
Job growth for the month is projected at 2.8 percent, down markedly from last December's employment estimation due to once-a-year readjustments or benchmarking mandated by the federal government. Growth adjustments during the benchmark are not uncommon.
Additionally, December's statewide growth rate was revised down from 3.6 percent to 2.9 percent. November was revised to 3 percent and October to 3.2 percent.
With the adjustments, Utah's employment expansion level dropped below the state's longterm average of 3.3 percent annually since 1950.
Approximately 33,800 employment opportunities were created in the Utah economy during the last year, raising total wage and salary employment statewide to 1,253,000.
The increase translates to around 2,800 jobs created monthly.
Utah's second primary indicator of labor market conditions, the seasonally adjusted unemployment rate, is being benchmarked and is scheduled for release on Feb. 26.
Workforce services anticipates that rate will be around 3.3 percent. If accurate, unemployment will have risen by 0.7 percentage points in the past year.
"The benchmark revisions show that the declines in Utah's employment growth rate began a few months earlier than previously announced and, therefore, lower the most recent forecasts," explained Mark Knold. department of workforce services economist.
"Overall, the economy is doing what we anticipated it would do - that is slow down and slow down rapidly. It's just that it began in September instead of in November as we previously had forecast," pointed out Knold. "This benchmarking is being done nationwide and I believe we will see many states have to lower their most recent employment forecasts, considering the recent and steep drop in the national economic environment. The bottom line for Utah is that our growth is slowing and it will continue to do so throughout 2008. The questions are for how long and how low? Will we match the national employment decline or will we merely mirror it, but at a higher level? The latter is our historical pattern."
At the national level, the United States' unemployment rate dropped to 4.9 percent in January. But the U.S. Bureau of Labor Statistics calls the decline a reduction in labor force participation, not job gains. Since January 2007, the U.S. economy added 977,000 jobs nationwide for a growth rate of 0.7 percent. The approximately 33,800 positions created in Utah represent about 3.5 percent of all the jobs added nationwide in the past year. Utah comprises less than 1 percent of the U.S. labor force.
Multiple industries no longer in an aggressive growth mode are the major reasons for Utah's decelerating employment situation. The economy is still growing, but the rate of new job creation is slowing noticeably and will continue to decrease throughout the year.
Construction, natural resources, and financial activities are three industries showing rapid deceleration in employment growth and will probably, within the next four to five months, move into negative territory, showing job losses in relation to the employment levels of the previous year. The industries are already shedding workers.
The primary economic drag impacting the U.S. and Utah is the housing market, with the greatest negative influence exerted by national activities. The sub-prime mortgage situation has restricted and tightened the funding application requirements. Prior aggressive use of sub-prime loans and low introductory mortgage rates fueled a housing price run-up that was not only historic, but unrealistic, indicated the department of workforce services economist. Not only does the housing market need a correction, but the financial industries are reeling from defaulted mortgages and non-performing loans. The housing and the financial markets demand a major market correction and the process is underway.
Utah is being influenced by the severe restricting of mortgage financing, the need to lower excessive housing prices, the resultant virtual shutdown of home construction and the rapid weakening of the greater U.S. economy. There is not consensus on the national scope of the downturn.
An economy can decelerate in two ways, noted Knold. One is to shed jobs. The other is to lay off workers, while not expanding and adding labor force positions. Either process slows employment growth in the economy. One does it rapidly, the other more subtly.
In Utah, initial unemployment insurance filings exceed last year's to date, but much of it seems to be construction related. Historically, construction claims spike in December. Filings did not spike in the previous two years, but 2006 and 2007 were actually an anomaly. Non-seasonal claims would be a sign of weakening and thus layoffs in the greater economy. The situation should come into focus by March, when construction claims usually drop and workers are normally recalled. If claims remain constant, it is a sign of weakness in the greater economy.
"Will the Utah economy see larger numbers of layoffs? It's easily possible, given what looks like a severe and rapid national slowdown. The unemployment claims will be monitored closely from month to month going forward. If layoffs don't mushroom, then Utah's employment growth should slow to around 2 percent by the end of the year. If layoffs do accelerate, growth by then will instead be around 1 percent, possibly lower. Can Utah drop to outright job losses? They're very rare in this state, but some will argue that the housing correction presents that rare economic environment," concluded Knold.