Employment & Economy
Rip Roarin’!
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Utah economic performance has been very impressive over the past 24 months ,” says Jeff Thredgold, |
President of Thredgold Economic Associates. “Powerful growth has been in line with most other states in the Rocky Mountain region, which easily leads the nation in economic vibrancy.”
The Utah economy added nearly 48,000 net new jobs during the most recent 12-month period, a growth rate of 4.2 percent. This powerful growth rate ranks Utah in the top five of the 50 states.
Quality Jobs
Utah’s surge in employment has occurred in all 11 major sectors, with higher income jobs leading the way. The professional & business services sector added nearly 11,000 net new jobs during the past 12 months, a growth rate of 7.6 percent. The construction sector added 8,300 new positions, a 10.7 percent gain. Both sectors have higher average wages than the state norm.
To its credit, the Utah Legislature provided solid funding for the USTAR (Utah Science, Technology and Research) initiative. This program helps the state’s research universities, working together with world-class research teams, to target opportunities to increase and enhance the state’s technology sector employment base. Because USTAR success could provide thousands of high quality jobs for years to come, the Salt Lake Chamber has worked hard to move it forward.
Sector Performance
Utah gained an estimated 3,000 manufacturing jobs over the most recent 12-month period, a growth rate of 2.6 percent. There are currently about 119,000 manufacturing positions in Utah.
Utah’s construction sector is booming and has been a key contributor to employment growth in recent years. Roughly 8,300 jobs were added in this sector over the past year. This translates into an impressive growth rate of nearly 11 percent. About 86,000 people are employed in the construction sector.
This sector of the economy, which includes wholesale and retail trade, saw an increase of 8,000 jobs over the past year, a growth rate of 3.6 percent. Roughly 230,000 individuals work in this sector.
Publishing, motion picture and sound recording, telecommunications, and Internet service providers make up the information sector. Current employment in this sector has hit about 33,000 positions, an increase of 1,400 jobs from a year ago.
Growth in financial activities was quite strong in the past year, with 2,700 new positions added. Nearly 70,000 Utahans are employed in financial activities, an increase of 4.1 percent over the year.
The professional and business services sector, which includes activities such as legal services, architecture, engineering, and employment services, saw employment rise by a whopping 10,800 jobs in the most recent 12-month period to 154,400 positions. This growth rate of 7.6 percent was one of the strongest in the state.
Growth in this sector has been strong over the last 12 months, with an increase of 5,700 positions.Roughly 135,000 individuals work in this sector. Growth is split fairly evenly between educational services and health services.
Boosted by the 2002 Olympic Winter Games and plenty of freshly-fallen Utah powder, this area of the economy has grown by around 2.1 percent in the latest 12-month period. Roughly 106,000 Utah residents work to feed, entertain, and accommodate both visitors and locals alike.
Auto repair, personal care, and non-profit organizations are some of the employment categories in this sector. Employment in other services is up 2.6 percent over the year at 33,900 positions.
The three levels of government—federal, state, and local—account for a combined 18 percent of the non-farm jobs in Utah, with payrolls totaling 209,900 in the latest month.
Tight & Tighter
Strong job growth is traditionally associated with tighter labor markets. This time around is no exception. The Utah unemployment rate fell sharply in recent months to its most recent level of 3.5 percent, one of the lowest levels in more than five years. By comparison, the Utah jobless rate averaged 5.7 percent in 2002 and 2003.
A tighter Utah labor market is great news for job seekers. It is making it difficult, however, for hundreds of Utah employers to fill open positions. Many companies have advertised for new hires, only to find limited, if any, interest. A number of employers are offering signing bonuses to fill their needs. A return to the tight labor era of 1995-2000, when the state’s jobless rate averaged 3.5 percent, seems in the cards.
Housing Gains
Strong Utah economic growth has led to rising home values. The National Association of Realtors reported a 13.6 percent rise in the median (half cost less, half cost more) existing American home during 2005. The study noted a 14.2 percent rise in the median Salt Lake City home.
The broader data of the Office of Federal Housing Enterprise Oversight (OFHEO) noted an average U.S. home price rise of 12.95 percent during 2005. The average Utah home price rose 13.36 percent, ranking 18th of the 50 states. As recently as year-end 2003, Utah ranked dead last.
The OFHEO study also includes price comparisons for the past five-year period. The average American home price rose 57.68 percent over the past five years, but only 27.77 percent in Utah. By comparison, the average home price during the past five years rose by 89.39 percent in Arizona, 117.29 percent in California, 28.02 percent in Colorado, 49.55 percent in Idaho, and 103.64 percent in Nevada. Such a comparison suggests that homes in Utah have greater upside potential than many other states.
Utah Outlook
Impressive Utah economic growth of the past 24 months should give way to slightly softer performance in 2006 and 2007. A reason? Labor scarcity will limit job gains. At the same time, well-diversified growth bodes well for future performance. For up-to-date analysis of Utah’s economy and other economic issues, please visit www.thredgold.com. |
