The share of unemployed Utahns, however, remains significantly lower than the national average of 5.1 percent, the Utah Department of Workforce Services reported Tuesday. About 46,200 Utahns were considered unemployed last month, up from 33,000 in March 2007.

"Historically, 3.3 percent is still low - it's a reflection of a very strong economy. There's a lot of room for it to go higher before we consider this to be an economy that's stressed," said Mark Knold, chief economist for the department.

Pushing unemployment higher is a slowdown in the state's ability to create jobs. Utah's job growth in the year that ended in March slipped to 2.1 percent, the state said.

That means the state created 26,200 jobs over that one-year period. Utah's job creation rate is down slightly from 2.3 percent in February and sharply from a peak nearly two years ago, when in the period that ended June 30, 2006, the state's economy added 54,000 jobs for an employment growth rate of 5.4 percent.

"Job growth could easily get down to 1 percent by the end of this year or early next year," Knold said. "I see the bottom somewhere around 1 percent."

But 1 percent job growth would not mean the state's economy is in recession, he said. "We're still adding jobs. But it means we're not adding jobs fast enough to absorb the growth in the labor force. And that means that our unemployment rate will go up."

Even with the slowdown, though, job growth in Utah remains higher than the U.S. rate of 0.4 percent. But economist Jeff Thredgold, a consultant for Zions Bank in Salt Lake City, also sees a slowing.

"The fact we're still growing at a moderate pace is still good news," Thredgold said. "There are a whole lot of states that would like to see 2.1 percent job growth and 26,200 more people working this year than before."

Knold said there's one key industry driving down job growth and pushing up the state's unemployment rate - construction, specifically residential construction.

"The housing market is the central problem right now."

As home sales have declined in recent months, people working for home builders, mortgage and title companies, and other companies related to real estate have lost jobs.

That's why the timing couldn't be better for projects such as City Creek Center and the numerous high-rise construction projects in Salt Lake City and the suburbs.

"If you're losing strength in the residential side, you want to see strength in commercial construction - and that's what we're seeing," Knold said.

Marty Plunkett, vice president of office properties at the Salt Lake City offices of CB Richard Ellis, said all the new commercial construction either under way or planned in the next several years is sure to create "tons of construction jobs."

According to CB Richard Ellis, 190,441 square feet of office space was absorbed by tenants in the first quarter, up 84 percent from the 103,639 square feet absorbed in the fourth quarter 2007.

Plunkett said the industrial market, made up mainly of distribution and warehouse facilities, as well as the market for retail space, are robust.

"We haven't felt the crunch yet like some of the other cities have," he said.

leslely@sltrib.com