Oil, natural gas remain bright spots in Utah economy, report shows
Oil and natural gas production remain two of the bright spots in the state and local economic picture, according to the Utah Department of Workforce Services. High energy prices stimulate activity, and Carbon, Uintah (natural gas) and Duchesne (oil) counties generally benefit from this action. Employment climbs in those counties, but the overall state benefits through increased revenues and royalty payments. Around 800 jobs have materialized in this industry over the past 12 months.
The state's's nonfarm wage and salaried job count for August 2011 expanded by 2.9 percent compared to August 2010. This is a 12-month increase of 34,400 jobs, and raises total wage and salary employment to 1,212,500.
The seasonally-adjusted unemployment rate, Utah's other primary indicator of current labor market conditions also generated by federal Bureau of Labor Statistics, registered 7.6 percent. Last month the rate was 7.5 percent, and a year ago the state's rate was 7.6 percent. Approximately 102,000 Utahns are considered unemployed. The United States unemployment rate, compared to last month, is unchanged at 9.1 percent.
The Utah employment environment is expanding. That is welcome news considering the negative impact the state had from the recession, and that Utah employment levels do need to bounce back. The Division of Workforce Services believes the current BLS-estimated 2.9-percent employment growth rate will be revised downward when the full gamut of employment data becomes available several months from now. But growth is growth, whether 2.9 percent or slightly lower. The national employment picture is very tenuous right now, so Utah's employment gains are most welcome and places the state in a stronger position to adjust if the national economy were to stumble.
Yet there is still underlying repair needed for the Utah economy. Many people have been relegated to the labor-force sidelines, and those numbers continue to increase. The employment-to-population (E/P) ratio measures those 16 years and older (defined as the potential labor force population) who are employed as a percent of all those 16 years and older. If all had a job the ratio would be 100 percent. But not all want a job, so the ratio is always something lower. Utah's E/P high point was in 2007 at 70.5 percent. But that ratio has fallen steadily during the recession, and continues to slip, illustrating that the pool of idle workers continues to grow, even with Utah job gains over the past year. August's E/P ratio dropped to 60.8 percent, the lowest E/P ratio since 1979. A new pool of entrants graduated into the labor force in June, and their surging impact upon the economy is evidenced by unemployment climbing from 7.3 to 7.6 percent since May.
Construction is on a better footing in Utah than seen for several years. Approximately 500 jobs have been added over the past year, a welcome change from what seemed like an endless stream of losses over the prior four years. All of these gains are coming from heavy and civil engineering projects, not from home building or commercial activities. Last month's initial estimate of 2,400 year-over-year job gains has been revised down to 1,400.
Manufacturing is one industry where the employment survey's estimates appear to be aggressive. The current estimate is for 5,800 jobs added over the past year, a growth rate of 5.2 percent, which would be a very robust rebound. This is one industry where Workforce Services believes data revisions will eventually reveal a more moderate growth rate.
The trade and transportation sector is another industry where the survey's employment gains might be optimistic. Gains of 7,600 jobs over the past 12 months are quite aggressive, and the survey continues to grow these estimates. Hopefully these estimates will turn into reality when the revised data comes in. Growth levels this high imply that consumers are again feeling good about their situations and are spending freely. Until further evidence comes in, it is natural to be cautious when evaluating this estimated growth given the current environment.
The professional and business services sector is the most robust Utah industry, adding over 11,200 new jobs over the past year. There is also some question about the volume of these gains. There is evidence that the help-supply industries (identified as employment services) are doling out workers throughout the industry spectrum, and that is a good indication that the economy is moving forward once again. The amount of growth estimated from the survey will probably be scaled back a bit when more comprehensive data becomes available.