Although Utah’s job growth and unemployment rates remain significantly better than the national average, the state’s department of workforce services reported today that employment growth has slowed considerably to the extent that it’s now below the state’s long-term average of 3.3 percent per year since 1950.

Job growth in January was 2.8 percent. About 2,800 jobs were created each month over the last year, according to Mark Knold, senior economist for the state government. That compares with a national employment growth rate of just 0.7 percent.

Unemployment figures are due in two weeks and state officials expect that the rate will be around 3.3 percent, which would represent a rise of 0.7 percentage points in the last year. The national unemployment rate is about 4.9 percent.

Knold says that state estimates — or benchmarking — had to be revised sooner and by larger numbers than anticipated because of accelerating negative national economic conditions. The revised benchmarks reflect changes since September as opposed to November when economists originally anticipated the slowdown to begin.

The slowdown is a marked change from the state’s remarkable performance in job growth during 2007. As Knold indicates: “The approximately 33,800 new jobs in Utah represent about 3.5 percent of all the new jobs added in the United States over the past year — this from a state that comprises less than 1 percent of all United States jobs.”

It is no surprise that the housing market remains the principal drag on the national economy and Utah is not immune from the dramatic correction now underway. “Utah is being influenced by the severe restricting of mortgage financing, the need to lower excessive housing prices, its resultant virtual shutdown of new home construction, and the rapid slowing and weakening of the greater United States economy,” Knold explains.

However, Knold cautions the direction in which the latest statistics should be interpreted. While initial unemployment claims are up, perhaps because of the softening market in the construction industry, economists still need some time to see if the numbers reflect typical seasonal trends or more worrisome non-seasonal factors. Part of the problem in Utah has been the fact that construction-related claims did not increase in the past two Decembers, which deviated significantly from the normal trends.

Knold believes it would be prudent to wait until March to see what happens in the construction industry as the weather warms. “If claims stay high, then it is a sign of weakness in the greater economy,” he explains. “But even then, unemployment claims of the past two years have been historically low, so any level is going to measure higher.”

Certainly, the big question is whether the state will see widespread layoffs. There is the possibility if the national downturn is sustained and worsens. At the moment, Knold believes the state could still see an annual job growth rate in the positive territory, although it will be substantially smaller than what has been observed in previous years. However, the size and the duration of the correction in the housing market could have a major impact upon the state’s job outlook.