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Show Volume XV Issue XIII The Ogden Valley news Page 13 June 15, 2008 Weakness in New Home Construction Hurts Many of Weber County’s Small Businesses Highlights The Zions Bank Small Business Index for Utah was 89.3 in May 2008, down from a revised 91.2 in April 2008 • Utah's unemployment rate was estimated at 3.1% in the latest month, down from the prior month's 3.3% rate. Total Utah employment is up an estimated 24,800 jobs during the past 12 months • Weber County experienced job growth of 2,100 jobs (2.1%) from a year ago. Joblessness registered 3.3%, up from the 2.7% unemployment rate one year ago • Much of Utah's small business sector is being negatively impacted by the weakness in new home construction within the state • The U.S. economy lost an estimated 49,000 net jobs in May, in line with expectations. The U.S. unemployment rate jumped to 5.5% in May from 5.0% in April, the largest monthly rise in 22 years Housing Pain It is certainly no secret that weakness in the nation’s home building and home resale markets is one of the two most worrisome economic developments of the past 12 months. The other major issue involves domestic and global credit markets that continue to perform poorly or actually “freeze up” at times, a victim of high levels of lender and investor anxiety. Four “highflying” states (Arizona, California, Florida, and Nevada) accounted for much of the overbuilding during 2003 to 2006. These states also attracted most of the home “flippers” (out-of-state investors with $$ signs in their eyes) who bid prices to extreme levels during those same years. Each of these states is now in, or flirting with, its own recession and declining home values. Many other states also saw home builders add too aggressively to housing inventories. As a result, home building activity has fallen across the U.S. to the weakest level since the early 1990s. Such new home construction weakness has also impacted the Utah economy. While many Utah homes are built by large companies, many small businesses are also involved in the home construction sector, acting as builders, architects, engineers, suppliers, home furnishers, landscapers, etc. Many of these firms have struggled. In addition, other nonhousing businesses that had benefited in recent years from solid income gains of construction workers have also struggled. The level of new housing permits is a component of the Zions Bank Small Business Index for Utah. A decline in the level of home building pulls the Index lower. Utah Employment The Utah unemployment rate-the most heavily weighted component of the Zions Bank Small Business Index for Utah-was estimated at 3.1% in the latest month, down from the 3.3% rate of the prior month. The 3.1% rate compares to a 2.5% rate during the same month one year ago. A lower Utah unemployment rate is a negative contributor to the Index as it implies decreased access to Utah labor. Utah’s unemployment rate averaged 2.7% in 2007, 3.0% in 2006, 4.2% in 2005, and 4.9% during the 2000-2004 period. These rates compare to an average Utah unemployment rate of 3.5% between 1995 and 1999. Total Utah employment rose by an estimated 24,800 jobs (up 2.0%) over the past 12 months. This rise compares to a revised gain of 26,600 jobs in the prior year-over-year period. The 2.0% rise still ranks as one of the strongest job growth rates in the nation. Utah added a revised 47,800 jobs in 2007, 55,700 jobs in 2006, 43,700 jobs in 2005, and 30,200 jobs in 2004. These totals compare to gains averaging 38,000 new jobs annually during the 19942000 period and a net loss of 1,300 jobs in 2001 through 2003. More recently, weaker job gains, leading to lesser income creation and softer retail spending, have a negative impact upon Utah’s small businesses...and therefore, the Index. The Zions Bank Small Business Index for Utah was 89.3 during May 2008, down from a revised 91.2 during April 2008. The Huntsville Independence Day Run 4th of July, 2008 1 Mile Fun Run ~ 5 K Race ~ 10 K Race Index measures business conditions from the viewpoint of the Utah small business owner or manager. A lower Index number is associated with less favorable business “conditions” for Utah’s small businesses. The Index uses 100.0 for calendar year 1997 as its base year. The Index includes revisions to various historical and new forecast components as they become available. Local Performance Weber County experienced job growth of 2,100 jobs (2.1%) from a year ago. Joblessness registered 3.3%, up from the 2.7% unemployment rate one year ago. Davis County payrolls expanded by 1,200 jobs (1.1%) in the past year. The unemployment rate was 2.8% in the latest month, up from 2.3% one year ago. Cache County employment grew by 1,500 jobs (2.9%) in the latest 12-month period. The area’s jobless rate was 2.2%, up from the 1.8% rate of one year ago. Salt Lake County employment rose by 12,000 jobs (2.0%) over the year. The county’s unemployment rate was 2.9% in the latest month, up from 2.3% last year. Utah County employment grew by 3,300 jobs (1.8%) over the last 12 months. The area’s jobless rate was 2.8%, up from the 2.2% rate of one year ago. Washington County payrolls expanded by 1,100 jobs (2.1%) in the past year. The unemployment rate was 3.5% in the latest month, up from 2.4% one year ago. National Employment The U.S. Department of Labor reported a net decline of 49,000 jobs in May 2008, the fifth monthly decline in a row, and slightly less than the consensus view of a loss of 60,000 jobs. Losses of the two prior months, however, were revised to even greater losses by a combined 15,000 jobs. The U.S. unemployment rate jumped to 5.5% in May, up sharply from April’s 5.0% rate. The 0.5% rise was the largest monthly rise since February 1986. The 5.5% rate is also the highest since October 2004. Much of the increase seems tied to faulty seasonal adjustments which did not accurately account for teenagers entering the labor force as schools ended classes. A lower unemployment rate in June is entirely likely when the data is reported on July 3. The current 5.5% jobless rate compares to a 4.5% rate of one year ago. The average hourly wage rose 0.3% (five cents) to $17.94 hourly, a rise of 3.5% over the past 12 months. Goods-producing employment continued to decline in May, with a net loss of 57,000 jobs. Construction employment fell by 34,000 positions, while manufacturing lost another 26,000 jobs. Service-providing employment was weak in May with a rise of only 8,000 net new jobs. The education & health services sector added 54,000 net new jobs during the month, while the professional & business services sector lost 39,000 jobs. The government sector added 17,000 net new jobs during the month, while the leisure & hospitality sector added 12,000 jobs. The estimated net decline of 324,000 jobs during 2008’s first five months was a painful contrast to the average rise of 734,000 net new jobs during the first five months of 2006 and 2007. However, the average loss of 65,000 jobs monthly during 2008’s first five months is roughly onethird of the 181,000 average monthly job losses during the 2001 recession. The June 2008 Zions Bank Small Business Index for Utah will be released on July 8, 2008. Zions Bank is Utah’s oldest financial institution, and is the only local bank with statewide distribution of branches, operating 114 full-service branches throughout Utah. Additional information is available at <www.zionsbank.com> Subscriptions available for out of area residents at $18.00 annually. Send payment with mailing address to: The Ogden Valley news P O BOX 130, EDEN UT 84310 Place: Race begins at Huntsville Park Pre-Registration Time 6:15 a.m. Race will begin at 7:00 a.m. For more information call Colleen Burton @ 644-1002 2008 Independence Day Fun Run Registration Form Pre-Register $20 for Adults $15 Under 16 years of age $25 Adults $18 Under 16 after June 27th Green Living in Eden Energy Conscientious Living on the North Fork River Encouraging Wind & Solar Energy Solutions 3/4 Acre River Front Home Sites Lots from $219,000 801-745-8400 | www.riversedgeut.com PH:801-745-8400 | FAX:801.745.3650 | P.O. BOX 985 EDEN, UTAH 84310 | www.mOUNTAiNlUXUry.cOm |
