Despite the sustained growth of its services sector, employment growth in Salt Lake City almost stalled in August. In that month, it increasd by a marginal 0.4% year over year, down from 4% year over year in December 2007. This figure represents the weakest showing for employment growth since the end of 2003.

By far the major contributor to this sharp deterioration in employment was a 5,100-job drop in construction employment, brought on by the collapse of the metro area's housing market.

Four sectors have added jobs over the past year: education and health services (+5.1%); leisure and accommodation (+2.0%); government administration (+1.6%); and transportation services (+1.2%).

New house construction will probably remain in the doldrums well into 2010, thanks to Salt Lake's large inventory of unsold new and existing homes and the escalating number of foreclosures.

In August, year-to-date housing starts in the city were off by 41%, following a 20% drop during the whole of 2007. In 2009, housing starts are likely to remain in the range of 3,500 to 4,500.

Despite the weak demand for ownership accommodation, rental demand has, according Property and Portfolio Research, increased significantly over the past several quarters. This demand has driven the apartment vacancy rate to its lowest level since 1996.

The recent deterioration in the fourth-quarter 2008 Manpower Employment Outlook Survey indicates weak employment growth ahead for the city, which suggests that rental demand will probably soften over the next four quarters.

In the near term, prospects for the Salt Lake economy are cloudy, obscured as they are by the recent financial market volatility and the effect of tightening credit conditions on the city's housing market.

However, moving further ahead, the effects of the Downtown Rising redevelopment project (scheduled to be completed by 2011) should serve as a catalyst to the metro area's economic growth in the medium term.

It is projected that this development will directly create an estimated 15,000 new jobs when completed and will serve as a magnet for new businesses in Salt Lake City's downtown core.