In the state's jobs report out Tuesday, overall employment in the state crept up by 0.1 percent in September over the same month last year.

That means that the state's economy added 1,800 jobs in the past year - only a sliver of the state's work force of nearly 1.3 million, said Mark Knold, chief economist for the Utah Department of Workforce Services. Although the numbers don't provide the best news, they are "better than the national picture, where the economy is into its sixth month of declining employment."

But for how long?

"The recent national economic meltdown makes me wonder whether Utah will be able to continue to keep its job creation machine functioning," Knold said in Tuesday's report. "The seizing up of the financial markets may be even more than the Utah economy will be able to bear.²

Already, there are growing signs of strain. Utah has been affected by the tightening credit markets in that mortgage companies stung by losses have made it more difficult for potential buyers to qualify for home loans. That, combined with reduced affordability after years of home-price run-ups, has vastly shrunk the buyer pool and led to a decline in home sales along the Wasatch Front and in St. George.

The fear is that resulting employment losses in residential construction, where employment is off 12.5 percent from last year, could spread to other sectors. The downturn already has hit industries that depend on real estate, such as brokerages, home loan providers and title companies.

Paul Newton, a vice president at Backman Title Services in Murray, said it took months for companies that depend on the housing market to be affected by the sharp downturn in new construction and fall in existing home sales that began last summer.

"There's definitely a trickle-down effect." His company had a few layoffs, while other title companies have cut wages and still others have closed entire offices.

"It's hard to tell how long this will go on and how all of this is going to end," he said.

Economists say those who lose jobs, have their pay cut or see their house reduced spend less money in the economy, which in turn affects companies that depend on consumer spending, such as auto dealers and clothing retailers.

Already, consumers are purchasing less because higher prices for food, gasoline, rents and utilities have eaten up more of their discretionary income.

One person who is watching his money these days is Russ Johnson, who owns a homebuilding company in Farmington and also manages a mortgage lending office in Bountiful. Business at both enterprises is down dramatically.

More would-be buyers are having trouble qualifying for home loans for sure, but he thinks a growing problem is that people who have the means and financing to buy are putting off purchases because they are waiting for the market to hit bottom.

"I don't know what they are waiting for," he said. "I guess they are waiting for a million-dollar home to be a $1 before they buy."

He recently had a woman offer him $500,000 for a house that cost him more than $1 million to build. He passed.

Although the job picture in Utah is creating challenges, things could be worse. Overall, Utah's job creation is down substantially from a peak gain of 5.4 percent and 54,000 jobs in the year that ended June 2006. But the state's rate still far outpaces the nation's rate of negative 0.4 percent.

The state's seasonally adjusted unemployment rate was 3.5 percent in September, up from 2.8 percent in the same month last year. Approximately 48,300 Utahns were considered unemployed in September, compared with 38,400 in September 2007.

As with job growth, Utah's unemployment rate remains significantly lower than the nation's unemployment rate of 6.1 percent.

lesley@sltrib.com