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Utah economy growth cooled by labor shortage
Written by Tooele Transcript

Thursday, 21 September 2006

The Utah Department of Workforce Services says that a shortage of temporary workers in the state may be arriving and may forecast a tighter labor market overall in the near future. The temporary worker pool grew more slowly than in recent months.

The number of available temporary workers can predict general labor shortages that may hinder the rapid growth of Utah's ecomony, the department says.

Utah's number of non-farm wage and salaried jobs registered a year-over-year increase of 4.4 percent for August, 2006. Approximately 50,400 new jobs have been created in the Utah economy over the past year, raising total wage and salary employment in Utah to 1,202,000.

Although Utah's growth rate is slowing, Utah remains within the top five states nationwide for employment growth. Utah's July employment growth rate has been revised down to 4.6 percent.

Utah's other primary indicator of current labor market conditions, the seasonally-adjusted unemployment rate, registered 3.2 percent in August, down 0.9 percentage points from the unemployment rate of 4.1 percent registered a year ago in August, 2005. Approximately 42,500 Utahns were unemployed in August 2006 as compared to 51,700 in August 2005. July's unemployment rate is unrevised at 3.4 percent. The United States' unemployment rate dipped slightly to 4.7 percent in August.

"The tightening labor supply is apparently beginning to restrict Utah's economic expansion," said senior economist Mark Knold from the Department of Workfoce Services. "Unemployment in the low 3-percent range represents a fully-employed labor force. Additional workers come from either non-participants entering or returning to the labor force, or a steady inflow of migrating workers. It seems that the Utah economy is experiencing a slight labor force bottleneck.

"It's interesting to observe states like Nevada and Arizona, who have employment growth rates higher than Utah and for longer than Utah, yet those states have unemployment rates in the mid 4-percent range & a full percentage point higher than Utah. That suggests a pretty substantial and consistent flow of in-migration into those states. Their employment growth potential keeps getting fed. Utah's immigration, on the other hand, though historically high, still doesn't seem to be high enough to keep the engine at full throttle."

Since August 2005, the United States' economy has added 1.7 million new jobs & a growth rate of 1.3 percent. The approximately 50,400 new jobs in Utah represent a growth rate of 4.4 percent, and that represents about 3 percent of all the new jobs added in the United States over the past year.

All employment sectors in Utah continue to add new jobs. Some are booming, like construction and mining of natural resources. Employment gains in those industries over the past year are measured at 14.9 and 17.6 percent respectively. Rarely have those two industries seen activity as robust as the current environment.

Officials in contruction and mining continue to indicate an ongoing need for workers. Yet their sizzling growth rates show that despite the tight labor situation, they are still managing to find workers to meet most of their needs. This strong demand for workers makes one wonder how much more these industries have the potential to grow if they were not facing a tight labor market.

Construction continues to lead the way with the most new jobs over the past year. Approximately 13,000 new jobs were added in this sector. Construction growth is pervasive throughout the state, and is seen in both residential and non-residential activities.

One sector appears to be the sole influence for this slight slowing in the Utah economy & professional and business services. The addition of 10,300 new jobs over the past year and a growth rate of 6.9 percent is usually considered solid growth, but this sector recently added more than 12,000 new jobs over the past year. This is the only sector that has experienced a measurable throttling back of employment growth over the past three months.