Tuesday, January 7, 2014

Utah’s Third Quarter Employment Growth Better than Estimates Predicted

Mark Knold, Supervising Economist

A preliminary look at Utah’s third quarter employment data reveals that the Utah economy is performing at average. This is a commendable average, as Utah’s long-term employment growth is 3.1 percent per year—much higher than other state’s averages.

An additional bit of good news is this performance continues to be higher than prior estimates had suggested. Job growth for the July through September period averaged around 3.2 percent, whereas estimates made during that actual time period had growth at only 2.6 percent. The difference between the estimate and actual employment amounts to an additional 6,300 jobs. Total job growth between third quarter 2013 and third quarter 2012 is 40,800.

Initial employment estimates have been understating Utah’s actual employment growth for much of 2013. Employment estimates are generated each month by the U.S. Bureau of Labor Statistics from an ongoing survey of businesses. The intention is to solicit survey feedback and then expand it out to represent the entire face of employment activity. There is analyst judgment involved in how those survey answers get expanded, and this results in some estimates not measuring up against the actual performance.

Click on graph to enlarge

The actual count of employment activity comes later through the state’s unemployment insurance program—the program that may offer unemployment compensation to laid off workers. All Utah employers report their monthly employment counts into this system on a quarterly basis, and the summing of this data makes for the actual employment performance. But the long lag involved in receiving and summarizing this data makes it necessary to supplement with up-to-date employment estimates via surveys. But the comprehensive unemployment insurance data will eventually supersede the survey estimates.

The real strength of Utah’s employment growth is its diversity. It is spread across nearly all major industry groups. The small mining sector is the only industry group with fewer jobs than a year ago. Professional and business services leads the way with 6.1 percent growth and 10,300 jobs. This is followed by 7,000 jobs in the health care and private education sector, and another 4,200 in construction, among others.

This employment performance is encouraging considering the foreboding dialogue surrounding the economy at that time. The government sequestration and the possibility of a government budget impasse and shutdown dominated the economic news and it was felt this negativity would spread into the performance of the economy. But given the Utah job growth of the third quarter, it did not manifest itself during that time period.

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