Small business index predicts expanding statewide economy
Unemployment in Utah registered at 5.6 percent in January, remaining virtually unchanged from the rate posted last December.
Employment fell by 5,200 jobs statewide during the last 12 months, pointed out the latest Utah small business index.
A modest strengthening of the United States economy will help Utah's businesses.
More impressive U.S. economic growth is expected during 2003, indicated the report compiled by Zions Bank analysts.
Real inflation-adjusted growth in 2002 registered at 2.4 percent.
By comparison, the national economy expanded by 0.3 percent 2001 and 3.8 percent in 2000. Real growth should reach the 3 percent mark at locations across the U.S. during 2003.
A significant portion of the economic expansion will occur during the second half of the year, indicated the small business index.
The return of solid business spending is a key component of the forecast, according to the financial analysts.
Business investment climbed 1.5 percent in final quarter 2002. The increase represented the first rise posted by the sector in nine quarters.
Real growth in 2002's final quarter registered at a minimal 0.7 annual rate, tied toa rise in government spending.
Inflation pressures were muted in 2002, indicated the small business index.
The gross domestic product deflator, the broadest measure of U.S. inflation, climbed 1.1 percent in 2002 for the smallest rise since 1950.
Real growth in 2003's first half should register near a 2.5 percent annual rate, followed by 3.5 percent expansion in the year's final six months, added the analysts.
The forecast is based on a solution of the Iraqi situation, which slowed the economy in recent months, explained the small business index.
The unemployment rate is the most heavily weighted component of the small business index.
A higher jobless rate is a positive contributor, since it implies an increased access to labor, explained the analysts.
Utah's unemployment rate averaged 5.3 percent in 2002 and 4.4 percent in 2001.
By comparison, the 3.2 percent average during 2000 was one of the lowest registered since the early 1950s.
Weak job growth and employment declines lead to lesser income creation and weaker retail spending, exerting a negative impact on businesses.
The index fell slightly to 83.2 in January. A higher number is associated with more favorable business conditions.
The small business index uses 100.0 for calendar year 1 997 as the report's base year and includes revisions to various historical or forecast components.
At the national level, the U.S. Department of Labor's business survey reported a net increase of 143,000 jobs in January. The employment gains were significantly larger than the increase expected by financial markets.
The expanding opportunities in the U.S. labor market nearly compensate for the loss of 156,000 jobs in December.
The overall goods-producing sector of the U.S. economy remained flat in January, concluded the index analysts.