Utah's Employment Summary: October 2009

November 20, 2009 -- News Wire

Utah’s nonfarm wage and salaried job count for October 2009, as generated by the United States Bureau of Labor Statistics (BLS), contracted by 3.3 percent, an improvement over September’s revised 4.0 percent decline. Approximately 40,900 jobs have been removed from the Utah economy over the past year, lowering total wage and salary employment to 1,214,200.

Utah’s other primary indicator of current labor market conditions also generated by BLS, the seasonally adjusted unemployment rate, increased to 6.5 percent in October. Last October, the state’s rate was 3.5 percent, a 3.0 percentage-point increase over the past 12 months. September’s rate remained unchanged at 6.2 percent. Approximately 88,900 Utahns were considered unemployed in October 2009, compared against 48,300 last October, an increase of 40,600 unemployed workers. The United States unemployment rate climbed four-tenths to 10.2 percent for October.

Construction, manufacturing, trade and transportation, professional and business services, and leisure and hospitality remain the areas of most year-over job losses. Education, healthcare, and government remain the lone areas of job gains.

Construction still shows the most year-over losses of 14,100. Indications are that the job losses n the residential are bottoming out, but that nonresidential job losses will continue to add their negative influence across the next year.

Year-over job losses are still substantial in the professional and business services category, but there are some encouraging signs within. Temporary help employment seems to have bottomed out and turned a corner, with tepid job gains now being recorded, and more anecdotally, job orders on the rise.

Trade employment is beginning its normal late season rise, as retailers prepare for the upcoming holiday season. Last season was lethargic for Utah retailers, dealing not only with a falling economy, but also enhanced psychological uncertainty. This year, the economy remains weak, but the psychological uncertainty seems to be gone. The rise in the October retail numbers may suggest as such.

Although most other industries remain with job losses, their losses are tempering. Not so with leisure and hospitality. Its loss percentage continues to increase. A strong start to Utah’s ski season would be a welcome boost for this industry.

The rise in the unemployment rate was the big story on the national profile, with the rate rising above the psychological barrier of 10 percent. The U.S. rate took a sharp four-tenths of a percent increase for the month. State rates are influenced by the movement in the national rate, so Utah’s three-tenths unemployment rate rise was expected.

Utah’s unemployment rate stands 3.7 percentage points below the national average. This gap is historically wide, as the Utah rate generally does not diverge this far from the national rate. For example, the most recent low point for Utah’s unemployment rate was February 2007, with a rate of 2.4 percent. The U.S. rate then stood at 4.5 percent, the difference being 2.1 percentage points. That difference was understandable given Utah’s much higher rate of employment growth at that time in relation to the national average. But Utah’s recent employment losses mirror the national losses on a percentage basis in both depth and duration, so the gap between the Utah and U.S unemployment rates that has increased since the middle of 2008 presents itself as somewhat of an anomaly. Because of this sizable gap, it is anticipated that upcoming revisions to Utah’s 2009 unemployment rates, scheduled for early next year, should raise Utah’s unemployment rate and somewhat narrow this gap. Even with these anticipated revisions, Utah’s unemployment rates should still be lower than the national average, probably by several percentage points.

One factor as a partial explanation of this remaining gap is a falling employment-to-population ratio in Utah. As of January 2008 (just as Utah and the nation were entering into this economic downturn), 69.1 percent of Utah’s 16-year-and-older population was active in the labor force (that was higher than the national average). Yet as the economic downturn progressed and deepened, that percentage has deteriorated to 63.6 percent—a 5.5 percentage-point decline in the labor force participation rate. In other words, people are falling out of active participation in the labor force, and now lower than the national average. Across the same time period, the United States’ participation rate has fallen by only 1.0 percentage point (66.1 to 65.1).

Utah, with its much younger labor force, probably has more flexibility in terms of being able to absorb a larger portion of its labor force-age population becoming inactive. Returning to school, or leaning upon other family resources are possibilities. Utah’s younger workforce may not carry the same proportional weight of responsibilities as the nation’s baby boomer-dominated labor force—a cohort that may be faced with mortgage, car, and college-fund payments that force them to remain active in the labor force (i.e., looking for work).

Utah Labor Market Indicators

October 2009
Employment % Change: -3.3%
Employment # Change: -40,900
Unemployment Rate: 6.5%

United States
Employment Change: -4.2%
Unemployment Rate: 10.2%