Utah small business index climbs nearly three points
Utah's small business index registered at 68 in February.
Calculated by Zions Bank, the index climbed last month compared to January's revised 65.5 level.
The unemployment rate constitutes the most heavily weighted component of the index, pointed out economic consultant Jeff Thredgold. Analysts estimate the statewide jobless rate at 4.6 percent, with total employment dropping by approximately 20,400 jobs during the past 12 months.
The 15-month nationwide recession will likely continue throughout most of 2009, negatively impacting Utah's small business sector, indicated Thredgold. The United States lost an estimated 651,000 net jobs in February, matching economists' expectations.
The U.S. Commerce Department reported in late January 2009 that the American economy contracted at a real after inflation 3.8 percent annual rate during 2008's final quarter. A greater than projected drop in consumer spending contributed to the nation's economic woes. Representing roughly 70 percent of total U.S. economic activity, consumer spending contracted at a 4.3 percent annual rate last quarter.
The contraction, combined with the 3.8 percent rate of decline during third quarter, was the first time consumer spending has weakened by at least 3 percent annual during consecutive quarters since record keeping started in 1947, pointed out Thredgold. The consensus of forecasting economists suggested in recent weeks that a return to minimal U.S. economic growth could begin as early as third quarter 2009. However, recent U.S. economic data suggest that the current recession could continue until near the end of the year.
More bearish forecasters suggest a recovery will not unfold until well into 2010, noted the Zions Bank economic consultant. For the first time since WWII, the U.S., Europe and Japan are in recession at the same time. U.S. and global economic performance are components of the small business index. As a result, weaker performances in the two economies contribute to a lower measure.
A higher index number is associated with more favorable conditions for small businesses. The index uses 100 for calendar year 1997 as the base year. Consultants include revisions to various historical and available current forecast components in the index' calculation process.
Utah's unemployment rate averaged 3.4 percent in 2008, 2.7 percent in 2007, 3 percent in 2006, 4.2 percent in 2005 and 4.9 percent during the 2000-2004 period. The levels compare to the average 3.5 percent statewide jobless experienced between 1995 and 1999, indicated Tredgold.
At the national level, the U.S. Department of Labor reported a net loss of 651,000 employment opportunities in February, representing the 14th consecutive monthly decline. The American economy has dropped nearly 4.4 million jobs since the recession started in December 2007, with more than one-half of the employment losses occurring in the last four months.
The average hourly wage paid to American workers inched up 0.2 percent or three cents to $18.47. The average wage has climbed 3.6 percent in the last 12 months.
However, goods producing employment declined sharply in February, posting a net loss of 276,000 jobs. Manufacturing fell by 168,000 positions, while construction lost 104,000 jobs. Service-providing employment decreased by 375,000 positions.
The U.S. professional-business services sector lost 180,000 jobs, while employment in the leisure-hospitality and retail trade industries dropped 33,000 and 40,000 positions respectively.
On the positive side of the economic spectrum, the nation's education-health services industries created 26,000 positions in February, while the government sector added 9,000 jobs at locations across the U.S., concluded the Zions Bank consultant.