Idaho small business index drops but still better than average

by Brad Carlson

Conditions for small businesses have been better than the norm for several months, according to a Zions Bank measure.

Operating conditions for small businesses fell in March but remained better than normal, Zions Bank reported.

The bank’s Small Business Index for Idaho was 106.8, down from a revised 107.8 in February, Zions Bank economic consultant Jeff Thredgold reported. The index uses 1997 as its base year with a score of 100 and includes revisions as they become available. A higher index number implies more positive conditions for small business owners and managers.

A drop in Idaho’s unemployment rate, the most heavily weighted component of the index, dragged the index lower. A falling unemployment rate implies fewer workers are available to small businesses. Idaho’s most recent unemployment rate of 8 percent compares to 8.1 percent a month earlier and 8.8 percent a year earlier.

The rate of job creation has boosted the Idaho Small Business Index in the past year, implying customers have more money to spend, despite fewer jobs added in the most recent month, according to Thredgold, who owns Thredgold Economics in Clearfield, Utah. Idaho’s increase in employment, estimated at 8,500 jobs from February 2011 to February 2012, compares to a revised gain of 9,800 jobs from January 2011 to January 2012.

Idaho gained a net average of 15,300 new jobs a year from 1990 to 2005, Thredgold reported. In 2011, the state gained 3,200 jobs. Idaho lost jobs in each of the previous three years: 6,300 in 2010, 38,900 in 2009 and 6,100 in 2008. These losses followed job gains of 16,500 in 2007 and 27,100 in 2006.

The U.S. Bureau of Labor Statistics in March revised January job creation in Idaho down by 25 percent, from 13,100 to 9,800, said Taylor Thredgold, officer manager for Thredgold Economics. The February index in turn was revised down from 108.7 to 107.8, she said.

Inconsistent job creation in the U.S. is prompting the Federal Reserve to keep short-term interest rates at historic lows, which bodes well for the Idaho Small Business Index by implying lower borrowing costs, Jeff Thredgold said.