March 23, 2012

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Article

Utah’s Employment Summary: January 2012

Press Release

March 23, 2012

Statistics generated by the U.S. Bureau of Labor Statistics, Washington, D.C., derived from monthly employer and household surveys.

Utah’s nonfarm wage and salaried job count for January 2012, as generated by the U.S. Bureau of Labor Statistics (BLS), expanded by 2.6 percent compared against the employment level for January 2011. This is a 12-month increase of 30,300 jobs, and raises total wage and salary employment to 1,207,400.

The seasonally-adjusted unemployment rate—generated by BLS—is Utah’s other primary indicator of current labor market conditions and registers 5.7 percent. Approximately 76,100 Utahns are considered to be unemployed. Annual revisions have been made to prior year’s unemployment estimations. The 2011 calendar year unemployment rate sits at 6.7 percent. It will undergo a second revision at this time next year. The 2010 annual unemployment rate has undergone its second revision, and it has been moved up from 7.7 percent to 8.0 percent. The current United States unemployment rate, as compared to last month, dropped from 8.5 percent to 8.3 percent. The United States unemployment rate does not undergo revisions. State unemployment rates do undergo revisions, as they are estimated using econometric models, and additional data pieces and revised population estimates can foster additional changes.

All of Utah’s industrial sectors are adding jobs, the lone exception being leisure and hospitality. That industry is experiencing the adverse effects of a lean snow year. Skier days and ski revenues are negatively impacted this year by the dearth of snow across the western United States. For the resort communities, this impacts ski ticket sales, lodging stays, restaurant seating, equipment rental and sales, and transportation support. For January, the industry employment is down by 900 workers statewide.

But outside the lean snow year, the overall Utah economy is maintaining its recession-recovery mode and corresponding employment expansion. Gains of 2.6 percent may still be below Utah’s average potential, but considering the deep recessionary environment we are pulling out of and the more restrictive hold that recession still has on many other state economies, employment gains even below the state’s average are an achievement. Utah’s current growth offers a developing base upon which to cultivate future growth. For the Utah economy to move above its annual growth average though, the housing market must re-emerge and become vibrant again. The current economic environment has set the stage for an even modest housing-market correction to immediately make a contribution.

There still remain issues yet to overcome. The January unemployment rate has drifted down to 5.7 percent (end-of-year annual revisions to the unemployment rate lowered December’s rate from 6.0 percent to 5.8 percent). Generally, the unemployment rate offers a transparent picture of labor force utilization, but in the current environment, its message is a bit muddied. A sizable number of adults have exited the labor force over the past three years; therefore their idleness is not reflected in the current rate. Many are young adults who have opted to further their skills and career prospects by entering higher education or extending ongoing studies. Eventually, these students will graduate and return to the labor force, setting the stage for unemployment rates to remain elevated and possibly even rise as time moves forward—even as the Utah economy continues to expand employment. The silver lining of the recession is this large pool of young adults who will be offering a higher skill set to the future economy than otherwise might have been.

The industry in front of Utah’s economic recovery is professional and business services. Approximately 6,700 new positions have been added over the past 12 months. Nearly all are coming in the high-paying professional and technical industries like legal services, computer systems design, consulting, and market research. This is welcome news as high-paying jobs are always desired within an economy, because high earnings tend to trickle down through the economy and stimulate other levels of consumer spending.

Such a phenomenon is actually manifesting itself through employment gains in the trade and transportation sector. This industry has the second highest level of new jobs added over the past year—5,000 positions. Additions are all coming on the trade side of the ledger, and are evenly split between wholesale and retail sales. Increasing retail sales and corresponding employment gains are a sign of not only growing consumer confidence and activity.

Education and healthcare remain as stalwarts in the economic employment picture. The sector has grown by 4,800 positions over the past 12 months. These gains are largely equally split between private education (public education is grouped in government) and the healthcare industry. The demand for both of these industries’ products is driven by the size of the local population, its growth, and any changes in the demographic profile.

Manufacturing jobs are estimated to have grown by 4,700 positions over the past 12 months. Utah had speculated in prior month’s employment announcements that the manufacturing employment gains were being overstated, and the annual revision process has indeed born that out. For most months of 2011, Utah manufacturing employment gains have been reduced by a half. Still, this current month estimation is probably also an overstatement, although by a much smaller percentage than had occurred throughout most of 2011.

One of the more encouraging aspects of the current employment estimates is the 3,300 new jobs believed to have developed over the past 12 months in construction. This has been a perpetually downtrodden industry for the past four years. Most of the current gains are coming via commercial projects, an area that did not have as deep or as lengthy a setback as the residential construction portion. The I-15 rebuild and the construction of the National Security facility, both in Utah County, are leading projects in this construction rebound.

* Utah’s February employment information was released at 9:00 a.m. on Friday, March 23, 2012. (Note: The later-than-normal release date for January was due to the yearly data-revision process. This delays only the January release).

* County unemployment rates for January will be posted on or shortly after March 9 at
http://jobs.utah.gov/opencms/wi/pubs/une/season.pdf
(3.23.12)

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