Utah jobless rate rises as government employment weakens
Utah's vaunted jobs-generating machinery is losing some of its steam as the effects of federal budget cuts spread through the economy.
On Friday, the state Department of Workforce Services said the statewide unemployment rate in June ticked up a notch to 4.7 percent from 4.6 percent in May.
More significantly, the number of new jobs created by private and public employers slowed to 2.2 percent in June compared with the same month of last year. It was the slowest year-over-year pace since June 2011 and the third consecutive monthly decline from March, when annual job growth was 4 percent.
"I wouldn't say it's a new chapter [in Utah's recovery from the recession], but we definitely are cooling off," Carrie Mayne, the department's chief economist, said.
Mayne pinned most of the jobs slowdown on federal budget cuts, or sequestration. Between June 2012 and last month, private sector employers in Utah created 34,700 jobs. But government employment fell by 6,500 jobs, or 2.9 percent. The net increase of 28,200 jobs was the smallest year-over-year gain since last September.
"Government is contracting, as it has for a few months," Mayne said.
Sequestration also may be hampering private sector job growth. While all nongovernment sectors of Utah's economy, with the exception of natural resources, added jobs in the past 12 months, the rate of year-over-year growth is noticeably slower. Information service jobs, for example, grew 11.5 percent between February 2012 and last February. By June, growth in that sector had dwindled to 6.7 percent. Construction employment increased 8.6 percent in the year ending in March. In June, the rate was down to 1.1 percent.
"Construction has come down," Mayne said. "We thought that construction would be up a lot more this summer. It does stand out as one [sector] that has slowed in growth more than we were expecting. But it is still growing."
Juliette Tennert, chief economist at the Governor's Office of Management and Budget, said, the across-the board dip in the state's job growth rate should be kept in perspective.
"Overall, we are continuing to do well," Tennert said. "During June, Utah ranked third in the nation in private sector job growth as compared to the year before, and our unemployment rate last month was the eighth-lowest in the nation."
The U.S. unemployment rate was 7.6 percent in June. Year-over-year job growth was just 1.7 percent.
If there is real weakening in Utah's jobs picture, the evidence isn't easy to see, said Travis Ashby, chief executive of Oozle Media Inc., an online marketing and software development company. Business has been good enough to add six employees to his Sandy-based company since January. Thirty people are now on the payroll, and Ashby expects to hire another 10 people before the end of the year.
"I'd say [the economy] is very strong," Ashby said.
"My evidence of that is the 150 clients that I have, half of which are Utah companies, are all having fantastic growth in revenue and employees," he said. "Our clients are spending more money with us, and we are getting clients that we've been working on for awhile. It look's good."
Job seekers don't appear to be discouraged by the slowdown. While the number of unemployed rose in June, so did the labor force and the labor force participation rate, suggesting continued confidence in the Utah labor market, Mayne said.
See more about comments here.