As Utah’s unemployment rate slowly inches upward in a softening labor market, the state’s economy continues to add jobs.
Utah’s nonfarm payroll employment for June 2024 increased an estimated 2.4% across the past 12 months, with the state’s economy adding 41,400 jobs since June 2023. The state’s current job count stands at 1,766,500.
June’s seasonally adjusted unemployment rate is estimated at 3.0%, up a tenth of a percent over May and a half a percent since May 2023. About 54,300 Utahns are unemployed. The June national unemployment rate increased one-tenth of a percentage point to 4.1%.
“The unemployment rate’s creep higher reflects a softening labor market but 3% is still low territory, historically speaking,” said Ben Crabb, chief economist at the Utah Department of Workforce Services.
The June numbers show another month of robust jobs growth , Crabb said.
“For the last year, job expansion has been concentrated in construction, private education and health services and the public sector. Public sector hiring is now starting to cool and the unemployment rate, while low, has been slowly ticking upward. With inflation trending in the right direction, an interest rate cut later this year is not out of the question and would stimulate continued job growth in the state,” he said.
Jobs gained and lost
Utah’s June private sector employment recorded a year-over-year expansion of 2.1%, an increase of 31,300 jobs. Seven of the 10 major private-sector industry groups posted net year-over-year job gains. The overall gains are led by education and health services (13,000 jobs), professional and business services (7,900 jobs) and construction (5,700 jobs). Financial activities (-400 jobs), and information (-500 jobs) were the only sectors with year-over-year job losses.
The government sector, including public education and health care, expanded by 3.8% over the year, adding 10,100 positions to payrolls.
“After being a major source of job growth for the last year, government hiring is starting to slow as the public sector approaches the overall employment share that it occupied pre-2020 at about 16% of all jobs statewide,” Crabb said.
Softening labor market
Crabb also pointed to other indicators of the state’s softening labor market.
The labor force participation rate, which measures the proportion of Utahns 16 and older who are either working or looking for work, has dropped 1.1 percentage point from its peak 10 months ago of 69.7% to 68.6% in June.
Also, the number of job openings continue to trend downward as the pinch of higher interest rates dampens business activity and hiring plans and the average number of hours worked has trended slowly downward as businesses seek to hold on to workers while trimming overall expenses, Crabb said.
The Federal Reserve has not ruled out an interest rate decrease by the end of the year. The latest Bureau of Labor Statistics reports show prices grew just 3% over the past year, beating analysts’ expectations and bringing the Fed closer to the 2% target rate it hopes to attain.
“Lower interest rates would be welcome news for the state’s economy as it would help stimulate job growth to keep the expansion of the last few years humming along for a while to come,” Crabb said.