Labor • Unemployment dips to 5.8% but job growth stagnates.
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Utah's labor market took a turn for the better in August, although the improvement was limited.
Statewide, the unemployment rate slipped to 5.8 percent after remaining unmoved at 6 percent for four consecutive months, the Department of Workforce Services said Friday.
At the same time, the number of employed workers was 2 percent higher than a year ago, for a 12-month increase of 24,300 jobs. The rate of year-over-year job growth was unchanged from July and the slowest since June 2011, underlining the deceleration in momentum that began in January.
"The amount of job growth that we have been able to produce, coming from the bottom of the recession until now, has topped out," Mark Knold, the department's chief economist said, adding that significant improvements aren't likely for the rest of 2012. Standing in the way are uncertainties about the presidential election and worries about whether Congress will do anything to resolve the looming "fiscal cliff" tied to tax increases and spending cuts, which has businesses wondering what the tax climate in 2013 will be like.
"It's just bumped into a ceiling, and we are not going to get it to go beyond the current growth levels until we get some of these questions answered," Knold said.
To be sure, the job market continues to be better than in most parts of the country. In August, the U.S. unemployment rate was 8.1 percent and job growth was just 1.4 percent. Like Utah's rate, the sluggish growth is barely enough to assimilate the number of people entering the workforce for the first time, and too slow to fill most of the millions of jobs that were lost after the recession started in 2007, said Knold.
If there was good news in the department's report, it was that all 11 sectors of Utah's economy added jobs in August. Even the still-struggling construction sector put on 800 workers. Moreover, the number of first-time claims for unemployment benefits is at a four-year low of roughly 1,600 per week. By contrast, initial claims got as high as 5,200 during one week in February 2009.
As it has for more than two years, the professional and business services sector of the economy added the most jobs (7,200), followed by manufacturing (3,600), another stalwart in the state's recovery.
Consumer confidence is still muted across the U.S., but there is enough optimism to rev up sales at Nammo Composite Solutions, a Salt Lake City manufacturer of composite metals products for military and commercial customers. At the outset of 2012, Nammo employed 50 people. Today, the company has 80 people on its payroll, and by the close of 2012 employment is expected get as high as 100, Nammo President Brian Lundy said.
The growth spurt was fueled by landing a contract with defense contractor Raytheon, which hired Nammo to manufacture a launch tube into which TOW anti-tank missiles are inserted. The tube, which contains a wiring harness and provides an electromagnetic shield to guard the missiles, will be made at Nammo's factory at 1000 South, close to Interstate 15. Production is set to start in two weeks.
Nammo is a division of Nammo Group, a Norway-based arms manufacturer that is is a joint venture of the Norwegian and Finnish governments. The parent company, which bought Nammo from Lundy in 2009, has invested more than $2 million to renovate the Salt Lake City factory, including $1.3 million this year, marketing manager Karl Hawes said.
After a sharp decline in 2009, Nammo's commercial business is bouncing back, too, Lundy said. The company's composite products are found in expensive mountain bikes, camera tripods and motorcycles. Rising sales of those consumer products suggest confidence in the economy is building again, he said.