Utah Job Growth Slows

For a while it looked like Utah would remain the "belle of the ball" relative to the rest of the nation. While states like CA, NV and AZ were going through steep declines in real estate and economic growth, Utah kept chugging along. Unfortunately, the July numbers are out from the US Bureau of Labor showing Utah's job growth continues to fall, down to just .6%.

This number is best understood looking at the recent trend, from January 2008 to July 2008, job growth has been, 2.5%, 2.3%, 2.3%, 2.0%, 1.5%, .9% and now .6%. Economists had predicted growth to hang out in the 2-3% range, so this trend has caught even the experts unawares. I had hoped with robust job growth our glut of housing inventory would soon be bought up, now it appears this won't happen any time soon.

Enjoy today's article from the Salt Lake Tribune

Utah sagging job growth: Nation's pride no more

By Lesley Mitchell
The Salt Lake Tribune

A downturn in home sales in Utah has led to job losses in a host of related businesses, such as builders, title and mortgage companies and real estate brokerages.

The woes of that one industry sector have pushed down the state's job-growth rate to an anemic 0.6 percent in the year that ended in July, translating into an overall gain of only 7,300 jobs in the state over the one-year period, according to a report released Tuesday by the Utah Department of Workforce Services.

That rate, the lowest in about five years, is well down from a growth peak of 5.4 percent and a lofty gain of 54,000 jobs in the year that ended June 2006.

Utah's job-creation rate, among the best in the country at one point, is closing in on the U.S. average of negative 0.1 percent.

But relatively few people outside the home-sale industry are feeling the pain at this point. In Sandy, for example, home remodeler Doug Swensen said he initially wasn't sure how the downturn would affect his business. But so far so good, he said Tuesday while working in Holladay on yet another kitchen and basement renovation.

"If people can't sell, they are staying and remodeling. We're still really busy."
Workforce Services chief economist Mark Knold said Swensen's busy schedule illustrates just how home-sale-centric Utah's economic slowdown really is.

"Construction is really the only major problem right now."

Construction-industry employment in Utah is down nearly 12 percent, or 12,800 positions, a significant drop considering that commercial construction is still going strong. Two industry sectors - information and financial activities - are off only slightly. All others posting healthy gains.

Job losses in the construction industry have pushed Utah's unemployment rate higher. Utah's jobless rate in June was up slightly, to 3.5 percent, which translated into 48,900 Utahns who were looking for work. That's up from an unemployment rate of 2.7 percent in July 2007, when 37,000 people were considered out of work. The national unemployment rate is still much higher, at 5.7 percent.

The downturn in residential real estate markets in Utah and elsewhere stems in great part from tighter lending standards put in place in the wake of the nation's subprime lending crisis. The restrictions have made it harder for potential buyers to qualify for a home loan.

On another front, after years of home-price run-ups, homeownership is out of reach of many families. Fewer buyers means fewer sales of existing and new homes.

Utah's home-sale downturn began in earnest last summer, about two years after most surrounding states. As a result, those states are deeper into housing-related problems, with hard-pressed sellers in Arizona, California and Nevada forced to slash asking prices to get their properties sold.

But most economists say that's exactly what's needed to clear bloated inventories and set the stage for a real estate recovery.

Concessions of that magnitude haven't happened in Utah - yet.

"Utah is in its first year of denial," Knold said, adding that many homeowners are still reluctant to drop their selling prices. Some have let properties languish on the market, while others have taken homes off the market or are trying to offer leases until the market rebounds.

But by next spring, Knold believes a number of sellers who have held out will have no choice but to lower prices. Already, some builders are cutting prices to generate sales.

"Housing prices have to come down," Knold insists, adding that when they come down enough, it could spur buying that would put Utah's construction industry - and overall job growth - back on the right track.