Utah's job market continued to sizzle in July even as the housing slump slowed economic and employment growth in many parts of the nation, according to a report issued Tuesday by the state Department of Workforce Services.

The number of non-farm payrolls in Utah grew 4.7 percent, or 56,800 new jobs in July over a year ago, with almost all sectors, in particular construction and trade sectors, continuing to be strong employers in a tight labor market.

"It's a combination of trend and luck. The trend is long-term population growth," said Mark Knold, chief economist for the state Department. "The luck comes in having, so far, avoided any economic pitfalls ... mistakes made in other parts of the nation during the recent housing boom, whose bust consequences are now afflicting the national economy."

Knold is referring to the subprime mortgage meltdown that has pummeled the housing sector nationally. Aggressive lending practices for subprime and adjustable rate loans in the past few years had enabled people who didn't qualify for mortgages under normal circumstances to buy homes. The turmoil began in recent months when mortgage defaults among the riskiest borrowers began to spread as many weren't able to meet higher mortgage payments when their adjustable-rate mortgages reset at higher rates.

Utah County reported a gain of 6 percent, or 10,387 new jobs, in July, thanks to a vibrant construction sector that saw a 20 percent increase in the number of jobs over the past year, and job growth in manufacturing and retail trade.

"We're still seeing population spillover from Salt Lake City into Tooele and Utah County. Cities like Saratoga Springs, Eagle Mountain and Lehi are seeing a lot of that," Knold said. "But we're definitely seeing a slowdown in housing permits as demand slows because of the high housing prices, higher mortgage rates and a decline in affordability."

Construction remains the fastest growing sector with Utah employers adding 13,700 new jobs statewide in July, up 13.8 percent from a year ago. That's due in part to an increase in non-residential building activity that is "picking up any slack from the slowing residential sector," Knold said.

The number of residential building permits spiked in 2006, but permits for non-residential are still climbing. In May, there were $193 million worth of commercial property valuations in Utah. That's 29 percent higher than a year ago, he said, citing the latest construction data from the University of Utah Bureau of Economic and Business Research.

The uptick in retail, industrial, office and warehouse development builds new businesses, which in turn, creates new jobs. As a result, the trade, transportation and utilities sector gained 4.7 percent, or 11,000 new jobs in July, and is seen possibly overtaking growth in construction later this year.

Utah's seasonally adjusted unemployment rate was 2.7 percent in July, down from 2.9 percent a year ago. About 36,000 Utahns were unemployed in July compared with 38,300 last year. Nationally, the U.S. economy added 1.8 million new jobs in July, up 1.3 percent from a year ago.

This story appeared in The Daily Herald on page D6.