Job growth up in Utah, but U.S. economy holding state in check

A new jobs report from the Department of Workforce Services confirms a trend that has been building for several months. Utah's economy has plateaued and won't improve much more until the U.S. economy kicks into higher gear.

On Friday, the department said Utah's unemployment rate held steady, at 6 percent in June, for the third consecutive month. And although the all-important rate of employment growth increased by 2.6 percent, or 32,000 jobs, in the 12 months ending June 30, it remained under the long-term average of 3.1 percent. That latter rate is needed to put more people back to work and absorb 25,000 Utahns who come of age and enter the labor force each year.

"When you look at the whole flow of the data over the last six months to eight months, you don't see too much change in the rate of growth," said Mark Knold, the department's chief economist.

"It is growth, but it's not accelerating growth. It is not getting up to higher levels of growth. To me, that's a reflection of the tether that we have to the national economy."

Make no mistake, Utah is doing better than most states. Nationally, the U.S. unemployment rate in June was 8.2 percent, unchanged from May and a notch above April's 8.1 percent. The number of new jobs in the U.S. increased a weak 1.3 percent in June over the same month of last year. Year-over-year employment growth has been declining or flat for several months.

But Utah economists say that until the U.S. economy begins a sustained recovery, the state labor market will not be able to make much more headway than it has shown since last summer, when job growth finally moved above 2 percent.

"The wall that Utah has hit is a national economy that is going nowhere," said economist Jeff Thredgold, who consults for Zions Bank.

"When you look at the national economy, you have four months in a row of terrible jobs data. There is no leadership in Washington. People have finally figured that out. So you are seeing confidence levels across the country diminish," he added.

Natalie Gochnour, the Salt Lake Chamber's chief economist, was equally pessimistic.

"The Utah economy has hit a plateau until the U.S. economy gains more steam," Gochnour said in an email. "Utah is dependent on the national economy, and we need economic leadership in Washington to fully regain our economic stride."

James Saffari, director of engineering at Dynotron Inc., said growth at his small Salt Lake City electronic engineering services and circuit board assembly company's is being held in check by the torpid economy.

Although manufacturers such as Boeing are eager to buy Dynotron's LED flashlights, which can be used in confined spaces without fear of igniting fumes, the market for its keypads that operate swimming pool covers and motor controllers buckled when the housing bubble collapsed, Saffari said.

"We had a 30 to 40 percent drop in that business just from the new residential properties not being built," Saffari said.

He is working with the Governor's Office of Economic Development to secure contracts with state and federal governments. Because of good demand for Dynotron's LED products, he has job openings for three or four technicians. But until the economy stabilizes and housing recovers, he'll put off hiring more workers and keep his inventories of parts and products lean.

"I feel [the economy] is kind of flat, moving sideways," Saffari said. "It's stable, but not growing."

Gov. Gary Herbert, who last year pledged to help create 1,000 jobs in 1,000 days, saw more to cheer in the jobs report. He cited Utah's job count expanding by 2.6 percent in June, up from May's 2.4 percent.

"This is a small number with a big impact," Herbert said in a statement. "Utah's economy is growing twice as fast as the national economy, proving yet again that when government gets out of the way and simply facilitates economic growth, the private sector thrives."

pbeebe@sltrib.com

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The U.S. economy is showing renewed vigor after struggling during much of 2011, and Utah is outpacing the rest of the country. Unemployment is down and the pace of job creation has picked up.

But will it last, and will it be enough to return unemployment rates to pre-recession levels? If you own a business, tell us your hiring plans for the rest of 2012. Do you expect to add employees, lay off workers or keep things as they are? Contact reporter Paul Beebe at pbeebe@sltrib.com for possible inclusion in a story.