Slow Business Growth Keeps Unemployment Rate at 7.3% for 3rd Month
The unemployment rate held steady at 7.3% during April--unchanged for the third consecutive month--as the business expansion moved ahead at a slow pace, the Labor Department reported Friday.
The economy has settled into a period of modest growth, sufficient to absorb the number of persons coming into the work force but too sluggish to reduce the ranks of the jobless, many experts believe.
“The nation’s economy remains strong,” White House spokesman Larry Speakes declared in Bonn, where President Reagan is attending the annual seven-nation economic summit meeting.
Rates Up in L.A., State
In California, joblessness rose to 7.3% from 6.9% in March, and in Los Angeles it soared to 8% from 6.6%. However, a single month’s figure is highly volatile and considered somewhat unreliable. The trend over several months shows a 7.1% jobless rate for Los Angeles, “close to what’s happening in the national picture,” according to Lynn Reaser, senior economist and vice president at First Interstate Bancorp, which supplied the adjusted Los Angeles County figures.
Business is generating jobs at a healthy rate in the nation’s third year of economic expansion, but the pace remains far below the spectacular performance turned in during the early phases of the recovery. About 2.5 million jobs were created during the year ending in April, compared to nearly 5 million during the previous 12-month period, the Labor Department found.
“We’re definitely in a slow period here,” said David Ernst, vice president of Evans Economics, a Washington consulting and forecasting firm. “We’re seeing a very big contrast between the parts of the economy subject to foreign competition and those which aren’t.”
A flood of imported merchandise is hurting the sales of U.S. manufacturing firms as the strong dollar--rising in value in comparison to the British pound, West German mark, French franc and other currencies--makes imports cheaper for American consumers.
Gains in Service Jobs
Manufacturing employment dropped by 45,000 last month, suffering its third straight monthly decline, and Ernst noted that “goods-producing industries have really been socked by the strong dollar.” However, the manufacturing losses were offset by gains in construction and service jobs.
Indeed, many economists say that the overall outlook is relatively optimistic: The number of service jobs grows every month, and lower interest rates are eagerly expected.
Reaser said that “we expect a significant expansion in the economy by the summer” because the Federal Reserve Board has stimulated growth in the money supply--thus clearing the way for lower interest rates. This “cheaper” money would encourage the sale of homes and automobiles, which are usually financed with borrowed funds, and would also make it easier for businesses to get cash for expansion.
Last month’s 7.3% civilian unemployment rate meant that 8.4 million Americans were looking for work but were unable to find it, an increase of 30,000, the Labor Department said. A broader measurement of joblessness, including members of the armed forces, showed unemployment of 7.2% during April, also unchanged for the third straight month.
Discouraged Workers
However, the Full Employment Council, a coalition of church, labor and activist groups, charged Friday that the “real” national jobless rate is 13.2%, including discouraged persons who have stopped looking for jobs and part-time workers who would like to work full time. The Los Angeles rate, including discouraged and part-time workers, actually is 11.7%, according to a council report.
A total of 106.9 million Americans held jobs during April, a drop of 174,000, the Labor Department said.
The economy was weak during the first quarter, with the gross national product--the total value of goods and services--increasing at an annual rate of just 1.3%. But a pickup seems certain for the rest of the year, said Robert T. Parry, chief economist for Security Pacific National Bank in Los Angeles.
Unemployment in California traditionally runs somewhat above the national figure because the state’s labor force grows rapidly, stimulated by workers coming from elsewhere in the United States and by an influx of foreign workers.
A total of 11.9 million persons was working in California in April, a drop of 51,000 from the previous month. Unemployment totaled 940,000, up 50,000 from March.
Los Angeles County has both a strong service sector and a manufacturing base closely tied to the defense industry, which is benefiting from a large surge in government spending. Thus, the April jump in joblessness is likely to be misleading, economists believe.
A total of 3.6 million persons held jobs in the county during April, a drop of 45,000, and unemployment rose by 45,000 to 317,000.
