SALT LAKE CITY — The outlook for Utah's small businesses grew somewhat brighter in May compared to April, according to a report released Tuesday by Zions Bank.
The Zions Bank Small Business Index rose to 103.5 in May, which was an increase from April's 98.5.
The index measures business conditions for small Utah companies, with a ranking of 100.0 from 1997 as its base.
Contributing to the new figures was a hike in Utah's unemployment rate, which went up from 7.2 percent to 7.3 percent during the latest month these figures were available, which was April.
A higher rate of unemployment in the state assists small businesses, as calculated in the index, because it suggests there is a greater availability of labor in Utah for small businesses to hire.
Utah has lost approximately 7,100 jobs in the last 12 months. That loss of jobs also has a negative side for small businesses, because it means less retail spending and income creation.
The national economy, which is part of the index, gained about 431,000 new jobs in May, which was lower than the expected 520,000 new jobs. However, 95 percent of the gain was comprised of temporary jobs for the U.S. Census Bureau. There were only 41,000 new jobs in the private sector during that time.
The national unemployment rate went down from 9.9 percent in April to 9.7 percent in May.
Developments in Europe and China have added stresses and potential problems to the overall small-business climate in Utah, according to the Zions report.
"Frankly, it's hard to measure. It's not like you can say what happened around the world can affect Utah's small businesses by X dollars. We are part of the broader U.S. economy and broader global economy. What happens in Greece affects businesses in Utah. Exactly how much is difficult (to gauge)," said Kendall Oliphant, senior vice president of Thredgold Economic Associates, which prepares the monthly report for Zions Bank.
Oliphant said economists will be watching how well wealthier European nations, such as Germany and France, and the International Monetary Fund deal with debt problems in such countries as Greece, Portugal and Spain.
"It will be a key issue in the next few months," he said. "Investors around the world are watching what is happening. Interest rates, exchange rates, the value of the dollar, the value of the euro, how much people are paying for their mortgage are all affected by what's happening in Greece and other nations in Europe."
China also will come under close scrutiny.
"China, by most estimates, is now the second-largest economy in the world, with the U.S. as first," Oliphant said. "They are growing at an extremely strong, solid rate — in some cases over 10 percent per year. This last recession has slowed their economy somewhat.
"The problem with an economy that is growing too fast is that it can experience inflation, runaway inflation, bubbles. A real estate bubble in China is a realistic problem. The Chinese leaders are faced with wanting the economy to continue to grow to continue to provide jobs for hundreds of millions of Chinese to avoid unrest, but at the same time, avoiding the problems of a runaway economy, which are things that tend to collapse economies."
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