But strong retail, health, education, tech sectors seen shoring up Utah's economy

Grace Leong

A severely weakened housing market continues to slow the pace of job creation along the Wasatch Front, but that's partly offset by strength in the retail, health, education and technology sectors, according to a state employment report released on Tuesday.

The number of non-farm payrolls in the Beehive state grew 2.1 percent, or 26,200 new jobs in March from a year ago. That's down from 2.3 percent in February, but still outpaces the national job growth rate of 0.4 percent.

"Statewide, the pain is isolated to the residential construction market. Nationally, the credit crunch is putting us in a recessionary mode, and has so negatively impacted the Utah housing market that new housing approvals over the past six months are below half of what is normally approved," said Mark Knold, chief economist for the Department of Workforce Services.

"We're not at the bottom of this yet," he said. "Utah isn't likely to go into a job loss environment, but we could bottom out at 1 percent growth in the latter part of this year or by early 2009," Knold said.

Construction, which accounts for about 9 percent of Utah's total work force, shed 2,100 jobs to 97,200 in March from a year ago, due largely to the ongoing financial crisis and consistent double-digit drops in new home building permits for the past few months. Just one year ago, the real estate industry posted a gain of 12,000 new jobs in the same period.

"A strong rebound isn't anticipated in the immediate future. Utah might easily shed 10,000 construction jobs over the next two years, given that for every two workers it takes to build a house, it only takes one worker in the commercial sector. That means the commercial sector won't be able to absorb all the job losses in the residential market," Knold said.

But he says several other sectors, particularly health care, retail, education and technology, continue to be consistent job generators despite the economic downturn.

"High-paying professional jobs are still growing and in demand. Health care is its usual stellar performer," he said. Health care and education added a combined 5,800 new jobs, or grew 4 percent, in March compared to a year ago. Trade, transportation and utilities, which is now the lead driver of job growth in the state, added 6,700 new jobs in March. Much of this sector's growth is driven by the staffing of new retail businesses built this past year, Knold said.

Despite the closure of the La-Z-Boy production plant in Tremonton earlier this month and the subsequent loss of 630-plus jobs, the state's manufacturing sector is expected to continue to buck the national trend as more distribution centers are being relocated in Utah to service the West Coast area and reduce shipping costs, he said. Knold is referring to Procter & Gamble Co.'s plans to open a 1,000-worker manufacturing plant in unincorporated Box Elder County, and San Francisco perfume and cosmetics retailer Sephora's plans to open a 500-worker distribution center in Salt Lake City.

In March, Utah's manufacturing industries added 2,600 new jobs over the past year, the report said.

"Surprisingly, financial services grew 500 new jobs in March, even though I was expecting the credit crunch to take its toll on the mortgage and title companies," he said. But he expects that sector, which posted 4,400 in job gains in the same period just one year ago, to continue to slow down because the national financial services industry remains weak.

The technology sector, which accounts for 5.3 percent of the state's employment, has rebounded since the dot-com bust in 2000. The industry added 3,000 new jobs in December, bringing the total to 67,900 jobs and surpassing its previous record high of 67,700 in December 2000, according to the state employment department's most recent data.

"That sector may account for only 5.3 percent of the state's total employment, but it accounts for 9.2 percent of $4.2 billion in total payroll in Utah last year because of its high-paying jobs," Knold said. "The 2007 average monthly wage is $5,281, which is 83 percent higher than the statewide average of all industries."