While the state’s current job market remains exceptionally strong in some sectors, the facts that the housing market has yet to find its bottom and that the transportation sector is significantly affected by record fuel prices suggest the state’s dynamic job growth rates may have hit a wall.

The state’s job growth in May was just 1.4 percent, down considerably from the most recently downsized estimate of 1.9 percent for April, according to Mark Knold, senior state economist. The numbers, released today by the state’s department of workforce services, however, still reflect some economic resiliency compared to the rest of the nation. Utah’s unemployment rate is 3.2 percent, compared to the national figure of 5.5 percent. The nation’s employment growth rate is just 0.1 percent.

A weakened construction industry clearly has made its impact upon the state’s economy, Knold says, adding the state has shed more than 7,600 constructions in the last year. “Residential construction workers were let go during the winter months when the workload naturally slackens,” he explains. “So the housing slowdown that began last fall wasn’t fully exposed until now. The number of new homes permitted this year to date is so low that Utah is not seeing the spring rehiring surge that normally occurs.”

The city’s major downtown construction projects, however, are cushioning some of the decline in Salt Lake County. While Utah County’s construction employment is estimated to decline by 20 percent, Salt Lake County will, at least temporarily, hold its losses to around 10 percent.

On the positive side, the information technology, health care, and life sciences sector continue to perform well. While a relatively weak U.S.dollar helps domestic manufacturers who export to other countries, Knold notes that Utah’s manufacturers are feeling the pinch of currency dynamics because their operations are not built mainly around international exports. There are some indications from currency economists that the dollar’s downturn may be ending. The dollar recently rebounded to levels not seen since 2005 against the euro, Japanese yen, and the British pound.

As well, the state’s solid retail expansion of the last three years has slowed dramatically, a result of the troubled housing industry. “Current employment counts may suggest the market is still strong, when compared to the employment levels of a year ago,” Knold says. “But the recent slowing trend signals that employment gains have leveled off, and as time progresses, the year-over employment gap will lessen.”

Employment in the trucking industry also is down for the first time in six years as is the case in the railroad sector. Gains in courier services jobs also have slowed significantly.

And, fuel prices cloud the immediate forecast for the state’s tourism industry, especially in southern Utah. Knold suggests that some indicators — such as smaller tourist numbers for nearby Las Vegas — may signal a comparable softening in the state’s tourist traffic this summer.

Crude oil prices this morning are a bit off yesterday’s record levels where a barrel for July delivery touched $139.89. Concerns also are growing that oil prices may have reached an untenable level for the global economy. Recently, Saudi Arabia announced plans to boost production to a record 10 million barrels a day. And, today Kuwait’s oil minister said oil prices are too high as evidence mounts that energy costs are restraining growth and accelerating inflation.

Further details can be found here.