The end of the nationwide recession that officially started last March may be near, but Utah's small businesses have yet to see an improvement in their fortunes.

The Zions Bank Small Business Index for Utah, which measures business conditions from the viewpoint of a small-business owner or manager in the state, dropped to 78.9 in January from a revised 80.1 in December 2001.

A higher number in the index, which uses 100 for calendar year 1997 as its base, indicates better conditions for Utah's small businesses. The new report said the index fell in January because the state's weak job growth and employment declines led to lesser income creation and weaker retail spending.

Meanwhile, the state's unemployment rate — the most heavily weighted factor in the index — stayed steady at 5.3 percent in January. A higher unemployment rate is a positive contributor to the index, since it implies increased access to Utah labor, according to report author Jeff Thredgold, economic consultant to Zions Bank.

But in this case, that was not enough to offset the negatives of weak job creation.

"Total employment in Utah actually declined by 15,700 jobs (down1.5 percent) over the past 12 months," Thredgold wrote in the report. "This drop compares to the sharply revised 16,600 jobs lost in the prior year-over-year period. These new projections represent the first year-over-year declines in 20 years."

Despite the drop in the index in January, the Federal Reserve's decision not to cut a key short-term interest rate for the 12th straight time at its January meeting indicates that Fed members may feel an end to the recession is imminent.

"While financial markets have 'priced in' a move toward tighter monetary policy before the end of 2002's second quarter, we do not expect this move to occur," Thredgold wrote. "The expected U.S. economic rebound is likely to be somewhat modest by historical standards, providing little reason for the Fed to begin raising short-term interest rates so soon."

Thredgold said he expects the recession to end during the first half of 2002. And that would be good news for Utah.

"Stronger U.S. economic performance would soon lead to better performance in Utah," he wrote. "The state's businesses would benefit from increasing levels of U.S. manufacturing output, tourism and enhanced overall business activity."